Daily Independent (Lagos)
Sola Alabadan
6 October 2008
As a further step towards making the nation's insurance industry take its rightful place in the financial services sector, Group Managing Director of Standard Alliance Insurance Plc, Bode Akinboye, has challenged the Federal Government to set up a taskforce or empower the National Insurance Commission (NAICOM), with the sole aim of enforcing strict compliance on insurance regulations by the people, government and corporate bodies.
According to him, our government needs to borrow a leaf from its Canadian counterpart. "That the Canadian insurance industry controls the country's economy is as a result of the actions of such a task force set up and given much power to carry out its duties by the government," he stated, adding therefore that "it must be a taskforce that can bite."
Akinboye made the call in Abeokuta, Ogun State, during the 2008 Professionals' Forum of the Chartered Institute of Insurance of Nigeria (CIIN).
He stated that NAICOM's recent effort towards taking the issue of Compulsory Insurance of Public Buildings under section 64 and 65 of Insurance Act to the next level, by threatening to send defaulting owners and even tenants of such structures to jail deserves accolades from the nation's insurance practitioners. "This, I must say, is a welcome development for the industry. We pray this government agency would sustain this struggle and extend it into other compulsory insurance regulations," Akinboye noted.
Presenting a paper entitled "The Insurance Industry and the Challenges of a Vibrant Financial Services Sector," he lamented the poor nature of insurance business in the country, noting that the banking sector has been far ahead.
According to him, "in the last twenty years, banking institutions have dominated the financial services sector in our nation. For instance, comparing with insurance, the gross income of the banking sector is in the trillions while the insurance industry could only generate about N100 billion in gross premiums in 2007."
He argued that in terms of capital base, while insurance companies collectively boast of about N200 billion, this amount equates the paid up capital of one out of the 24 universal banks currently operating in the country.
In his words, "it has been estimated that as at May, 2008, banks account for about 63 per cent of the total market capitalisation of the Nigerian Stock Exchange (NSE). Hence, though co-venturers in the financial services sector, the insurance industry in Nigeria has consistently been seen as "poor cousins" to its banking counterparts".
While calling on government to urgently put a taskforce in place in addition to a well-focused empowerment of NAICOM, to give vent to compliance to insurance regulations in the country, Akinboye tasked practitioners to wake up to the challenges and realities of the day.
According to him, "we must be honest with ourselves and agree that the banking industry has been more proactive in addressing issues than the insurance industry. In fact, the insurance industry usually reacts to the banks when it comes to innovative issues.
"For instance, we started paying attention to branding and awareness issues after the banks had gone very far on such matters. Same applies to consolidation, increase in capital and corporate governance," he explained.
While challenging the insurance practitioners that it was now their turn to prove themselves after the Nigerian banks have mostly played their part as they now rank among the best in the world, Akinboye stressed the need for a study group comprising select seasoned members of CIIN, NAICOM, Nigerian Insurers Association (NIA) and principled experts to benchmark global happenings with a view to localising the results of their findings to the benefits of the industry.
He further advocated the need for merger among companies as he foresees that as the fastest way to having a much stronger insurance industry in the country that can take its expected place as the driver of the nation's economy, stating that the answer was not in the current habit of continually approaching the capital market to raise shareholders' funds.
He identified inadequate awareness creation as a major bane to the growth of the underwriting business, noting that "despite the financial capacity the industry now commands, I must warn that if its activities lack awareness, its efforts will still remain within just the elite group that has so far formed the lean patronage class.
"Rather than the current individual player's efforts at creating awareness through the media and other means for itself and products, I am of the view that the struggle calls for pooling our collective resources together for a united frontal awareness creation exercise for our business," he advised.
As a further step to heightening insurance activities, he challenged practitioners to begin to think of setting up micro-insurance institutions that will cater for the insurance needs of the lower section of society, which he said "are actually in the majority."
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