‘Local loss adjusters are not protected by underwriting companies’

As efforts to build local capacity in the nation’s insurance industry heightens, local loss adjusters have opened up to their non-protection by Nigerian underwriting companies. Modestus Anaesoronye in this interview with Lebi Omoboyowa, president, Institute of Loss Adjusters of Nigeria looks at the place of loss adjusting in Nigeria. Excerpts

Loss adjusting as an arm of the insurance industry has really not done very well when you look at what the insurance sector should do in the economy, what has been your challenge?

One challenge we are having is foreign loss adjusters coming to Nigeria to do business without involving the local adjusters.  The local content Act has the statutory provision that foreign loss adjusters who must come to Nigeria must work together with Local Loss adjuster(s). That way, there would be international exposure transferred to the local loss adjuster.

At the same time, loss adjusting fee should not be earned by foreign loss adjuster alone but should be shared with the local loss adjuster.

The challenge is that when these foreign adjusters come to Nigeria, our underwriters who are always the first port of call will not ask the foreign adjuster, who is your local partner because our law does not allow you to work alone.

Who actually invites these foreign adjusters?

The international arrangement is that the foreign loss adjuster is appointed by foreign reinsurers and, reinsurance business is an international business.  When the local underwriters get the business, they may not retain more than 10 per cent, they reinsure the remaining with foreign reinsurers – Munich Re, Swiss Re Lloyds and others. It is those foreign reinsurers that appoint the international loss adjuster to come down to Nigeria and do the job, particularly when it is a huge loss.

What is your relationship with local insurers?

Local insurers here on large claims appoint local adjusters on their own to represent their interest.  But the international reinsurer will always appoint their own adjuster to come and look at the business for them.  And because they have large chunk of the business, they have a right to appoint.  What I am saying is that when they come instead of working with the local adjuster, they do the business on their own and earn the money and this is capital flight.

What does the law say in this regard?

The law says in every business in Nigeria, particularly our own area; at least 30 per cent should be domiciled in Nigeria.  What we are even saying is that since they have the technical edge because of their international exposure, even if we can’t say 70 per cent to Nigeria and 30 per cent to the foreign firm, why can’t we come to a compromise, we do the job jointly, share common experience.  That is what we actually need in loss adjusting.  If we cannot share 70/30, we can always find a formula that can be comfortable for them that will encourage them to be coming.

But when they come, our own underwriters don’t ask them, where is your local colleague, which according to the law should work with you on this claim.  They should first of all ask that question and make sure there is a local adjuster that should work with the man before they can allow the man to go to site.

They claim that they do not give you the business because of lack of manpower and technology. How true is this?

There is no truth in that allegation and it is completely wrong.  Our members here are well trained.  They can do any business as far as Nigeria and West Africa is concerned.  Some of our members do business outside Nigeria and they do it successfully well.  You have to mark it, those people making that allegation, watch out for them.  Nobody has accused us that our adjusters in Nigeria are not competent.  If there is any, the institute will take it up, we have a disciplinary committee here that will investigate the claim and discipline the erring member.

On foreign involvement how are they paid, is it based on the local scale or they dictate?

When foreign adjusters come here, they charge the fee. They don’t make use of our own out-dated scale of fees which was agreed in 1992 and has not been reviewed till date. It is not only uneconomical; it is not even commercial to them. We Nigerian (adjusters) are complaining and groaning that the scale is uneconomical, it is not enough to sustain us much less employ hands that can take over from us. Can you imagine you employ a graduate, train and you are not able to keep the graduate because of poor remunerations by insurance companies for services we render? So the international adjusters come here and charge their fees, which are usually man-hour system, not our graduated scale of fees. Probably it is only in Nigeria that such scale is being using for payment system.

What is the institute doing to address that?

We are addressing it already. We are making progress with our discussion with the Nigerian Insurers Association. They invited us recently to come for discussion. We constituted a committee for that. They also constituted a committed at their own end. They have met at least once. They will be having another meeting this month. We have progressed on the negotiation, what will be the outcome I cannot say for now.

What is your assessment of the loss adjusting arm?

We are making progress, we pair ourselves with our international counter parts and I am happy to inform you that we are not lacking behind. Our association belongs to a world body- the international Federation of Loss Adjusting Association with headquarters in London. Apart from our own corporate body being a member, we have some individuals here who are fellows of that body, I am one of them and two others. Despite that, we need collaboration and corporation with adjusters coming from abroad to Nigeria. We would share experience and share the fee.

What area of the industry would like to comment on?

The insurance industry is doing fine, we only need to improve our operations in the area of penetration. Our penetration is too low unlike advanced countries where the reverse is the case.

I really appreciate the efforts of the commissioner for insurance in the area of insurance penetration. They are following up on micro-insurance, Takaful and these are areas which we have to pay more attention. Let macro business take care of themselves. In micro we have small scale industry and numerous small businesses and thriving individuals in their various trades. The small scale industry plays a more important role in the development of the economy because that is where you have a large base of people. In the 70’s, we had this home to home life insurance by British American Insurance Company, maybe we are going back there. I am satisfied the insurance companies are trying to improve on what the commission has laid down.