• Thursday, March 28, 2024
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BusinessDay

Top Nigerian brokers able to absorb $150m risks

Insurance industry recovering from COVID as reforms lift growth

The nation’s insurance industry has seen increased capacity as major brokers confirm up to $150 million local retentions on their individual portfolios in the 2022 renewal season.

According to the brokers, risks not more than this amount could comfortably be retained locally owing to the growing financial capacity of underwriting firms.

Industry analysts attribute the rising capacity to the ongoing recapitalisation of the industry, the influx of foreign insurers who are coming with huge funds to take position in the Nigeria market, prided Africa’s most populous nation.

Speaking at a media parley jointly sponsored by Boff & Co Insurance Brokers Limited and B. Adedipe Associates Limited, in Lagos, Babajide Olatunde-Agbeja, chairman of Boff & Co said the Nigerian insurance industry has seen increased capacity, though more are still needed.

Agbeja said ‘when Boff & Co started special risk 25 years ago, we were doing about 70 percent of our portfolio abroad, overtime, it reduced from 70 percent to about 20 percent and in the last six months, we had problems finding the excess capacity to insure abroad.”

“I am proud to tell you that, as of today, the businesses we did in the last three months being 2022 renewal were 100 percent placed in Nigeria, ” he said.

Boff & Co, which is among the top ten insurance brokers in Nigeria out of over 500, said retains up to $150 million risks locally, except is in excess of this we place abroad.

“The capacity is growing but we need to back it up with technical know-how, training, and retraining of staff, stating that the insurance industry should keep pace with the trend of events globally because insurance business is an international business.”

On the need for recapitalisation of the industry, he said, those who went to court to stop the earlier insurance recapitalisation exercise were doing a lot of disservice to the insurance industry.

“Although the industry is doing well, we only need to be better. We need to be sincere, be professional, and ensure that capacity increases continuously.

The economy is opening, investors are coming into investing in life and general businesses and special risks, because they have seen things we are not seeing and we need to work more on our technical know-how because that’s still lacking,” Agbeja added.

Earlier in his presentation titled “2021 Review and 2022 Economic Outlook,” the chief consultant of B. Adedipe Associates Limited, Biodun Adedipe, applauded the insurance industry but felt there are areas of improvement.

“Nigeria still experiences insurance low penetration and why? So, what next can the government do? The government also needs to be responsible to its insurance obligations. It needs to promptly pay a premium. There is also a need for flexibility and enforcement of the compulsory insurances, Adedipe said.

“If the government and its agencies are responsible, put more firmness into enforcement, then, what we have today will change and the industry will create more value. And of course, when the insurance sector is vibrant, it enables businesses and entrepreneurs to take risks which is part of the economic growth,” he pointed out.

On low insurance penetration in Nigeria, the economist said, there is a need for operators to provide adequate information to policyholders and prospective insurance customers and clients

“If someone says because of religion, can we point them to takaful. People need to see that insurance is fundamental and important for growth. Globally insurance is becoming more important and Nigeria cannot be left out from this trend,” Adedipe stated.

The National Insurance Commission (NAICOM) in 2019 directed insurance and reinsurance companies operating in the country to increase their minimum capital base.

For life and general insurance companies, they were directed to increase from N2 billion and N3 billion to N8 billion and N10 billion, respectively, while composite insurance companies and reinsurance companies were directed to increase theirs from N5 billion and N10 billion to N18 billion and N20 billion, respectively.

NAICOM, however, mandated insurers to fully comply by September 30, 2021, before it was put on hold following a court order instituted against the Commission by some group of shareholders.

Late last year, two of the biggest foreign-owned insurance companies, Old Mutual and Allianz, announced the full recapitalisation of their operations in line with earlier demand by NAICOM, increasing their paid-up share capital to N20 billion each. This is as over 14 local insurers were said to have met the capital requirement as at the end of last year.