Faturoti Olaniyi Samuel, the executive chairman of Fortgate Insurance, speaks on the relevance of having an insurance policy in difficult economic times. He said there is a lack of orientation and awareness on the value of insurance to the socio-economic environment of Nigeria. Excerpt:
In Nigeria's current economic climate, what is the fate of the insurance industry in the country?
Under the economic climate we face in Nigeria, I would like to say that this is the best time for the insurance industry and that citizens can ensure the insurance sector. You know what insurance is all about; it is about carrying the risks that exist. Going by the rot in the public and private sectors, you have assets that have to be insured. For instance, if you buy a car, given the situation that people are going through a lot, you have to buy insurance for it. Sometimes there are head-on collisions and people come here to say, I am sorry, I didn't know where my mind was, I have no money, salaries are not paid, my family could not do this or that; expectations are not met.
We believe that it is going to get better but given the present situation, this is the best time. There is something we call "silent risks", where assets are just idle and have not been effectively engaged. For construction companies, when there are delays in payment or termination of jobs, you need these assets for you to be up and running and do other jobs. If the assets are not insured or adequately covered, what happens? If because of your expertise and skills, you have another organisation that wants to take on your firm, you have to insure because some of these assets are prone to damage, theft, floods, etc.
So, insurance is very important. What we have realised is that there is not enough awareness; people have not discovered the value of insurance. For some of us who travel very well, for instance, in the US you cannot take an asset of $100 without covering it with insurance because they are affected by natural disasters like Tornadoes, etc. Also in London, it is the same. That is what I said in the beginning that I wanted to replicate world best practices in Nigeria. On my first visit to New York, I saw a lot of my people - insurance brokers - there in different areas of insurance practice. There, anything that is a tangible asset is going to be covered.
Back to your question, this is the best time for the insurance sector. I was listening to a DG of an agricultural agency and he said this is the best time to insure the farms. Insurance involves dealing with unforeseen circumstances like your seeds and agricultural produce. These things are exposed to fire, floods, etc. and if the farms are not properly insured, so much could be destroyed. So, this is the best time for us to explore insurance.
Are there concerns about the security of insurance premiums or difficulty in getting claims?
No, the insurance sector has been fully recapitalised. You may buy an insurance policy of N2m or N5m for an accident, flood, third party, etc. and if you have an underwriter or insurer who is not able to pay, you don't need to talk too much, just go to the National Insurance Commission (NAICOM) - the regulator and make your complaint. The insurer wouldn't want you to get to that stage. The insurer will see that you are quickly indemnified.
I used to be a banker, and we had that issue before Sanusi Lamido came on board and banker, the banks. The banks were recapitalised to an N25 billion capital base. Insurance bosses are asking for an N50 billion capital base. This still boils down to the fact that the awareness is still very low among the citizens.
So, what you are saying is that there is full confidence in the regulators of the sector?
The National Insurance Commission (NAICOM) is doing well; we have confidence in them. There is a need to reorient the members of the public and potential policy buyers and off-takers about the stability of the sector. The awareness has to be scaled up among the public. There is strong regulation of all players and there are sanctions for those who breach the rules.
What do you say to the cultural or religious beliefs that if one is divinely protected there may be no need to buy any form of insurance?
It still boils down to ignorance. There is a saying that if you say education is expensive then try ignorance. Nigeria's premium rates are among the cheapest globally. How much are the charges? You bought a property for N100m and you are asked to buy a 5% premium to insure it and you can't pay N5m for N100m? If you have that and something happens, you should know that you'll be fully indemnified. It is excess and depreciation. Insurance is like a pool of resources where everybody comes to get their equity and fairness. We need to sensitise the public.
What do you have to say about other factors that hamper claims like prolonged investigation?
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It is a pool of resources so there is an investigative aspect. We have had a lot of false claims. People set their vehicles ablaze to get more money to buy a new one. People tell all manner of lies. As I said, it is part of global best practice that when your claims are made, there has to be an investigation, there must be a police report backed up with evidence and you will be indemnified and compensated.
This is the best time to insure all your assets so that you don't put all your eggs in one basket.
What do you think is the way out of the economic difficulty in the country today?
My preliminary thought about the way out of economic hardship include government's swift economic intervention, flexible change in economic policy, right legal economic framework, quick governmental intervention aimed at cushioning the effect of price stability in the market, effective governmental intervention on micro economy, reduction of the price of goods and services, tax waivers on the manufacturers in the society, improving insecurity, direct subsidy for goods and services, effective palliatives to all the citizens by giving stable foods to homes and effective direct grants disbursements to citizens.
