The Nigerian insurance sector, in 2018, developed its cumulative premium from N363 billion in 2017, to N400 billion in 2018.
This described a 10 per cent rise in the volume of business written by the industry operators. But it was below the decade-old target of N1 trillion.
Revealing this at the 48th Annual General Meeting of the umbrella body of insurance underwriters, the Nigeria Insurers Association (NIA). Held in Lagos, President of the association, Mr Tope Smart, stated during the year under review, the insurance industry contended with a lot of negative circumstances. He highlighted these to include poor operating environment which the insurance sector like every other sector of the economy waded through in the year under review. In addition, he identified poor power outage, which according to him continued to be a major challenge to businesses in Nigeria,
He further noted that failure to abolish or amend the CITA 2007 remained a huge burden to the insurance companies.
Section 16 of the company income tax requires insurers to pay tax on every claims that is up to 25 per cent of their gross premium which they saw as double taxation.
Highlighting other negative factors that affected the insurers and the economy in general during the year, Smart, said “Growing herdsmen/farmers’ clashes across the country, insurgency and armed banditry in the north, rising cases of kidnapping, armed robbery and other violent crimes as well as communal clashes in some states all combined to negatively affect the bottom line of many insurance companies.”
He, however, said the association was working closely with the National Insurance Commission (NAICOM) to promote the business of insurance and increase its contribution to national Gross Domestic Product (GDP).
“Some of these initiatives include the insurance industry rebranding project, regulation on microinsurance, collaboration on financial inclusion, bancassurance guidelines and others which will impact positively on the business of insurance companies,” he explained.
The NIA chairman noted that the circular issued by NAICOM on the new capitalisation for insurance and reinsurance companies, was part of the regulator’s initiative towards promoting the insurance industry.
The regulator, had on May 20th, announced a new capital regime for the industry, saying that with effect from June 2020, insurance firms underwriting life business should increase their operating capital from the present level of N2 billion to N8 billion, those into General business are expected to increase theirs from N3 billion to N10 billion, composite firms would raise their capital base from N5 billion to N18 billion, while reinsurance firms would move from N10 billion to N20 billion.
Smart, however, noted that the association has started engaging NAICOM with a view to defining the components of the new capital level as well as the incentives and palliatives that members will enjoy to ensure that as many companies as possible scale through.
He urged the association members to contact the secretariat if they face challenges and also for updates, “on our part we will continue to update you as we make progress in our engagements with the commission.”
On the NIA towers project, the NIA chairman, who had promised to work with other council members for its actualisation, stated that substantial progress in bringing the dream to fruition had been made as he explained that the contractor and subcontractors have fully mobilised to site and that work was progressing according to plan presented by the contractor.
He commended the Chief Executive Officers of member companies for their support towards the vision through the payment of the NIA house levy. He also urged them not to relent as the association strives to deliver the project in July 2020.
Also speaking, NIA Director General/CEO, Mrs Yetunde Ilori, informed the members of successful implementation of a USSD code, which according to her would enable policyholders and law enforcement agencies to arrange for meetings where member companies can deliberate on the challenges and proffer solutions so as to ensure sustainable growth of the industry.
“The introduction of the code is a major achievement for the association as it eliminates challenges posed by poor internet connectivity in rural areas which had been a major issue in the development of hand-held devices for enforcement of NIID,” she stated.