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‘Recapitalisation, mergers key to creating viable insurance concerns’

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Salawudeen

Group President/Chief Executive Officer, Standard Insurance Consultants Limited (SICL), an international insurance/reinsurance brokerage firm, Dr. Ahmed Salawudeen, in this interview with OLAWUNMI OJO, he spoke on a number of pertinent issues in the industry, including the nexus between nonchalance of Nigerians and low insurance penetration, poor corporate governance and regulatory enforcement, among others.

Nigerians have a nonchalant attitude to insurance, which is contributory to the perennial challenge of low penetration in this clime. How best could the situation be improved?
For long, the attitude of the insuring public has not improved because of the perception that the insurance business is ‘legalised robbery.’ Incidentally, this is not so. Insurance business is an intangible product based on trust. Therefore, when a client has paid his or her legitimate premium and is unable to get compensation claims-wise, he/she will be dejected and disgruntled.

My view is that the bad image of Insurance generally has not helped. If the effort is geared towards improving the image, a lot of Nigerians will see insurance as a better solution to the inherent risks that abound everywhere.

My advice, therefore, is that all arms of the insurance industry, starting from the regulator, the risk carrier, intermediary fraternity, education sector and others, should come together to put in place a blueprint that will improve the image. The image issue is very important; it is a yardstick for moving the industry.

Poor corporate governance and risk management, an almost ineffective regulatory enforcement, lack of innovations in services and operations are some challenges that have preserved the industry’s underperforming status in the nation’s financial services sector. How does this sub-sector shed these encumbrances?
Stakeholders must stand firm to uphold the ethics of the insurance profession. Trustworthiness should not be discountenanced just as the risk carriers/underwriters must ensure that legitimate claims are settled when due. There is the urgent need for all arms of the industry, beginning with the regulator, the National Insurance Commission (NAICOM), Nigerian Insurers Association (NIA), Nigerian Council of Registered Insurance Brokers (NCRIB), claims adjusters, and the likes, to form a common block that will be advising government appropriately about the sector. This is very important if we must ensure professionalism is not thrown to the dogs. The industry should also fashion out a formula to make the insurance contribute positively to the GDP of the country.

There have been some FDIs into the industry in recent times, but talks of reform, capital adequacy and recapitalisation for the industry to fully harness FDI flows and improve efficiency have been sustained.

What are your thoughts?
Every actor in the insurance business must be highly capitalised. Therefore, the idea of recapitalisation will help the insurance industry. Some insurance companies are not adequately capitalised and in the circumstances, there is need for many of them think of mergers. That is, all the small-sized companies should come together and form a highly capitalised, viable concern that can weather the storm. Recall that in the early years, insurance companies were at the forefront of investing insurance funds with the banks. Simply put, banks relied so much on the investment being provided by insurance firms.

The premium generated countrywide needs to be invested in one form or the other. The idea is if the fund is provided to the banks, they will lend at a reasonable interest rate to the public for various economic activities and infrastructural development, and also to the mortgage banks. I remembered there was a special mortgage bank put in place by the government for this purpose long ago. However, it appears it is now history.

So, recapitalisation of insurance companies is very important and in the right direction. It will be beneficial if insurance companies and the banks play their role as it is done in civilised societies. Nigerians will be better off if things are done properly. On another hand, brokers’ fraternity provides insurance professional services and they do not require high capitalisation as brokers do not carry any risks. What is very important in brokerage business is the employment of qualified professional insurance personnel that can interpret policy terms and conditions.

Standard Insurance Consultants Limited (SICL) began its journey when the business of insurance was not this big. It has now grown into a big player in the industry, with an international presence. What values made SICL stay the course?
To run a business successfully in this country is difficult. But at Standard Insurance Consultants Limited (SICL), we started on a very sound foundation 40 years ago. We ensured that trust and integrity are key in our operations, which made people trust us with handling their insurance businesses. We were meticulous in our selection of underwriter/risk carriers in order to be sure that risks passed to us to provide insurance cover were arranged with reputable insurance firms to ensure prompt claims settlements.

We also ensured that premiums paid to us by our clients are remitted to the insurance companies soon as they are collected notwithstanding the 30-day of grace stipulated by the Insurance Act.

We honour legitimate claims settlement through financially sound risk carriers. Sometimes, we go out of our way to negotiate an “ex gratia” claim settlement, where there is negligence in complying strictly with the terms and conditions of insurance policies.

These are the values that have helped us to run our business effectively and to retain 95 per cent of businesses over time. Today, we are one of the top five insurance brokers in Nigeria, recognised by underwriters in the settlement of premiums collection. These values have also made us reputed internationally such that on behalf of Insurance companies, we place reinsurance programmes, particularly treaties, on the international insurance scene, and ensure that reinsurance premiums are paid when due.

What momentous occasions would you recall in the 40 years of SICL existence?
SICL took Nigeria to the highest level in 2017 when it received one of the world’s most important business awards from ‘The Bizz Awards,’ an annual global industry recognition awards event organised by the World Confederation of Businesses (WORLDCOB).

The award ceremony, held in Dubai, the United Arab Emirates (UAE), on Wednesday, November 15, 2017, saw SICL honoured with an Inspirational Award for outstanding contribution to insurance.

 
With that triumph, the company became an Elite Member of WORLDCOB alongside large corporations such as Sohar Bank (Oman), Dubai Duty-Free (UAE), Doha Bank (Qatar), Saudi Telecom Company (Saudi Arabia), BBK BSC (Bahrain), National Bank of Kuwait (Kuwait), Emirates Identity Authority (UAE), Ethiopia Airlines (Ethiopia), Karabuk University (Turkey), Credit Libanais (Lebanon), Al Sulaimi Group Group (Oman), Union National Bank (UAE), among other notable global companies.

Having been a recipient of WORLDCOB Award for three consecutive years since 2017, SICL is now a Platinum Member of the World Confederation of Businesses and also entrusted with the globally recognised WORLDCOB TRUST SEAL, which is a ‘Business Trust Seal’ created by the WORLDCOB to indicate that SICL’s legal existence is verified in Nigeria and its affiliations and commercial operations are globally proven. This, in turn, generates a level of business trust for SICL and promotes good business practices in the global market place.

Could you explain the impact of Coronavirus disease (COVID-19) pandemic on insurance and what needs to be done to support the industry?
COVID-19 has affected all insurance businesses across the globe, including Nigeria. However, the industry needs to be proactive and take decisive actions to ensure that financially, insurance cover is provided for those affected, or will be affected by the disease. For example, insurance firms are known to provide medical checkups for their teeming clients when they are taking life insurance cover or some other contingencies. By these tests, it is apparent that the virus could be detected to save the lives of billions of people across the world.

Again, insurance cover can be provided with either for individuals or groups. If this could be done proactively, it means a lot of business generation for the industry as a whole. The most important thing is to be proactive, think positively, and determine how this will be done to ensure that lives are protected and that financial benefits are provided on time for those, who have taken insurance policy to cover death, burial, medical expenses, and others.

Technology has also assisted in no small measure. Insurance business transactions can be done online, through video conferencing and others. Therefore business-wise, I believe the industry will not be affected seriously because insurance cover needs to be provided on a worldwide basis. For every stage of our life, we need insurance.

Give us insight into the future of insurance in the country and globally.

The future of insurance business post-COVID-19 in Nigeria and globally looks bright. Insurance companies provide cover for known and unknown contingencies and for the future. Therefore, a lot of insurance covers are being developed to cater for Coronavirus and other unknown viruses to ensure that adequate insurance cover is provided. For example, if there is an insurance cover in place against COVID-19 and the breadwinner of a family dies due to Coronavirus, the insurance firm will be able to provide financial backing to the family left behind to ensure that the family will not disintegrate even though the breadwinner of the family is no more.

Another example can be drawn from the Mortgage Protection Insurance Cover. That is, insurance protection can be arranged for an individual or group of people through a bank, a mortgage organisation, or from his employer for building, or purchasing a private residence by using the medium of a loan from these sources. In the case of his/her untimely death, the Mortgage Protection Insurance Cover will be made available to liquidate the loan so that the family is not put in a precarious situation. Therefore, for insurance companies providing cover, they are getting more businesses.

Also, insurance is basic whether we like it or not. Insurance cover will continue to be offered to all assets and liabilities. With or without COVID-19, insurance businesses continue. So, the future of the industry looks brighter post-COVID-19. The most important thing is for the industry to be proactive and let the public put trust in the business.


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