Insurers jittery over ‘transformation project’ as new government take over

A head May 29, 2015 when the newly elected government of Muhammadu Buhari, takes over to drive Nigeria’s economy, there are jitters among insurance operators that a new transformation projected recently launched in the industry by the outgoing administration, which is expected to drive growth and create jobs, may be dropped.

Concern among industry players is that if the incoming government, which has a strong position on change according to its manifesto does not carry along some of the outgoing government’s transformation programmes, the industry would have lost  a major overture for the first time by government to drive growth programme for the insurance sector.

“Don’t forget that this is the first time, government was coming to give insurance a priority and the commitment to make the sector contribute to economic development, the operator said.

“It is my hope that the incoming government and whoever is going to be the coordinating minister of the economy or finance minister as the case may be, will continue on this transformation project. If not, we would have to start afresh to lobby, educate, and begin to convince the new government on why insurance should be given priority in governance,” stated the operator who pleaded anonymity.

Ngozi Okonjo Iweala, the coordinating minister for the economy and minister of finance, had during the 2014 National Insurance Summit held late last year, challenged the insurance sector to grow the country’s Gross Written Premiums (GWP) to N1trn in the next three years, and  about $30bn in a decade.

The minister, who noted that the objective of the summit was to examine ways of invigorating the insurance industry for the next decade, to ensure that it contributes to national economic growth; charged the operators to grow the number of direct jobs created in the insurance sector from the current 30,000 to 100,000 people in next three years, and more than 300,000 people in the next decade.

To create more jobs in this sector, she said, there was need to focus on investment in training and skills development to prepare young men and women for careers in the insurance sector.

Okonjo-Iweala said the third part of the vision would be to widen access by growing the number of insurance policyholders in the country.

She lamented that in a country of 170 million people only 3 million policy holders exist, necessitating insurers to work to achieve a minimum of 10 million policyholders in the next three years, and 30 million policyholders in the next decade.

To achieve this, she said, the industry must think about new distribution channels for selling insurance policies – for example using mobile platforms, and also working with the CBN to identify appropriate bancassurance regulations.

“The first part of our vision would be to grow our gross written premiums (GWP) of N300bn today, to N1trn in the next three years, and to N5trn within the next decade. So we should be attaining gross premiums of about $30bn in a decade from today. Let us focus on that prize ahead and work towards that goal.

“The second part of the vision would be to grow the number of direct jobs created in this industry from the current 30,000 people to 100,000 people in the next three years, and to more than 300,000 people in the next decade.

“The third part of our vision would be to widen access by growing the number of insurance policyholders in the country. We are a country of 170 million people, but with only 3 million policyholders! So let us also work to achieve a minimum of 10 million policyholders in the next three years, and 30 million policyholders in the next decade,” she explained.

To fully harness the potential of the industry, Okonjo-Iweala said efforts must be made to address challenges such as lack of consumer trust, a fragmented industry with some weak and insolvent players, low enforcement of compulsory insurance policies, lack of professionalism by some agents and brokers in the industry, and a general shortage of skilled professionals in the entire industry.

According to her, enforcing compliance for some compulsory classes of insurance such as motor vehicle insurance and group life insurance would go a long way in actualising a world class insurance sector.

“As Finance Minister, I can tell you that a vibrant insurance industry promotes savings and investments, increases the overall financial assets in an economy and drives development of capital markets. In times of natural disasters (such as floods, hurricanes, droughts), insurance companies also help in providing financing to mitigate the social costs of catastrophes.

“The insurance industry is a major contributor to job creation across the world. We have an insurance market filled with opportunity – and many foreign investors are going to get even more interested in the coming years,” she added as she urged the stakeholders to discuss ways of actualising the visions highlighted.

Modestus Anaesoronye