Underwriting firms revert to composite structure
The Guardian gathered that the decision to merge their separate structure of life and non-life operations was aimed at reducing costs of operation and management.
Specifically, in 2007 the immediate past commissioner for insurance brought a regulation which directed all insurance institutions operating composite structure to separate life and non-life entities.
However, when the present Commissioner for insurance, Fola Daniel was appointed, he set up a technical committee to look into the complaints because some of the leading insurance companies in the industry did not obey the directives.
As a result. the committee report indicated that the 2003 Insurance Act provided for composite structure of operation, hence some companies in the market decided to return to composite because of high costs of management, taxes and levies to regulatory agencies.
For instance, LASACO Assurance Plc is the latest underwriting house to revert to the composite structure.
The Group Managing Director, Olusola Ladipo-Ajayi, who announced the return to composite structure said “As a going concern adapting to market demand and business operating environment is imperative for the success of any business outfit.”
He said “The decision to merge our life outfit with the mother company was taken after a deep thought on a number of business variables and the need to chart a new course for the group.”
The LASACO boss who is past chairman of the Nigerian Insurers Association (NIA) stated that business requires pragmatism and “we have always been bold in taking decisions not based on sentiment or following routine, but after systematic analysis of business trend with the future in view”
“Our reversal of a lot of negative business indexes last year did not happen by change but through painstaking strategic moves. We would therefore not shy away from taking tough decisions when need arises. It is all about the business”.
A chieftain in the industry who pleaded anonymity said “apart from the fact that the directives was not supported by law, it was most expensive because separating the composite outfit into different entities, involved high costs of staff, management, payment of taxes, levies to regulators and market associations. I think it is a business strategy that is left for management to decide the structure that would be beneficial to the interest of the company, when you take into consideration obligations to all stakeholders in the company”.
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