Government insists on recapitalisation of insurance industry
Urges operators to support sector’s well-being
The Federal Government has charged insurance operators not to work against the current industry recapitalisation move by the National Insurance Commission (NAICOM), which is aimed at taking the industry to lofty heights.President Muhammadu Buhari, represented by the Permanent Secretary, Federal Ministry of Finance, Dr. Mahmoud Isa-Dutse, gave the charge at the just-concluded 2019 National Insurance Conference, in Abuja, themed: Disruption, Innovation and Business Growth.
Buhari assured that government will continue to support the industry to enable it contribute effectively to national growth, while urging operators to support the recapitalisation project, as this will deepen insurance penetration, which remains a responsibility for all stakeholders.
Speaking, the Commissioner for Insurance, Mohammed Kari, stressed the need for radical reforms in the industry, accentuated by the disruptive impact of digital innovations in areas such as online sales technologies, machine learning, the Internet of things, advanced analytics, and virtual reality, among others.
He added that while these new technologies are already making it easier for consumers/policyholders to benefit from superior services and more choices as well as lower prices, there are corresponding challenges.
“Therefore, in order to remain relevant and become a critical contributor to the national economy, the industry must consciously be proactive and organised so as to take advantage of the opportunities provided by these disruptive developments while at the same time curbing their corresponding negative impacts.
“It is important to note that firms will only benefit from digital technology only if they embrace its potential along the entire insurance value chain, including underwriting and claims management.
Kari noted that from the regulatory standpoint, exploiting the opportunities of digitalisation, and taming the cumulative consequence of inflation and Naira devaluation heightens the need for the ongoing insurance industry reforms. Particularly for expansion of insurance distribution channels, financial inclusion, corporate governance enforcement, market discipline, professionalism, and recapitalisation aimed at strengthening underwriting institutions and increasing the spread in Nigeria.
The Chairman, Insurance Industry Consultative Council (IICC), Eddie Efekoha, pleaded with NAICOM to offer favourable consideration to suggestions made by the Nigerian Insurers Association (NIA), on recapitalisation, so that the necessary guidelines when released will ensure that the objectives of the reform are fully realised.
“This recapitalisation exercise, like every past reform, presents both opportunities and new challenges. As operators, we must begin now and not later to address our minds to the following questions: How do we maximise the use of the additional capital to generate superior returns to investors? How does technology help the industry to deliver superior service and deepen insurance penetration?
“How do we develop a data pool that supports improved pricing of risks underwritten and innovative products driven by consumer insights? What do we do to develop and attract the right skills and talents that can match the fast pace of technology revolution?
“How do we harness the values inherent in partnering with other industries like telecoms and banks to deepen insurance penetration? How do we partner with various arms of government like the NPF, Customs, and Fire Service, to ensure compulsory insurances are enforced? Above all, how can we cooperate better than we currently do for the good of all stakeholders?”
The Director-General, Budget Office, Ben Akabueze, implored insurance operators to embrace the recapitalisation, and ensure they revise the notion that they are the poor cousins of the banks.He posited that the industry is ripe for technological disruption, adding that insurance remains one of the tools for mobilising savings, hence, the need for consolidation.
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