With new waves of regulations sweeping across the financial services sector including the insurance industry, particularly after the economic crises of 2008 and 2009, there is now a new thinking that adopting self regulation rather than regulator driven practice would assist businesses and operators be more focused and make progress. Self regulation implies action by insurance companies and operators to voluntarily refrain from business conduct that is misleading, fraudulent, and in general would have adverse consequences for the purchaser of the insurance product.
Kola Adedeji, new managing director, CEO, Niger Insurance plc who spoke to BusinessDay in an interview said the operators must wake up and do the right thing, so that the regulators would not have to drive the system so hard, to the extent that operators have no option than to comply.
“I think we can help ourselves and help the system and even the regulator by doing the right thing so that we are not regularly put under pressure because of our attitude,” he said.
Adedeji stated that if this was not the case, the regulator could on its own come up with regulations that become difficult for operators to cope with, and “there is nothing we can do at that point,” he said.
Adedeji, who was full of confidence on the future of the insurance industry, said there is huge untapped potential given the country’s population of 160 million people and infrastructure development programmes.
He said the industry must create products that offer protection to the populace, stating that this would bring many people closer to insurance and build a cultural attitude that would sustain the industry in the years ahead.
In a recent report entitled, “Africa`s Diverse Insurance Markets Offer Growth Opportunities, Untapped Demand”, A.M. Best notes that the insurance industry in Nigeria has very huge untapped potential.
According to the report, A.M. Best considers the development of the life portfolio in Nigeria as positive for insurers` diversification, although management teams may need to demonstrate their skills in these new areas.
Yvette Essen, report author and director of Industry Research, Europe & Emerging Markets, said: “There is still potential for further consolidation. Nigeria`s insurance market remains fragmented, with only two non-life companies maintaining market shares of more than 10 percent. The small size of companies and the nature of the risks underwritten can lead to relatively high and volatile expense ratios.”
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