Experts in the insurance sector have said that the compulsory housing insurance policies in the country if enforced, would be valued at over N1trillion, urging the National insurance Commission (NAICOM) to take a bold step immediately.
The Managing Director of Sunu Assurances Nigeria Plc, Samuel Ogbodu, who spoke to The Guardian over the weekend, said that a look at some estates in Lekki, Ikoyi and Victoria Island alone, shows that securing policies for them would amount to over N500 billion, and when you consider houses across the country, it will be over N1 trillion.
Ogbodu, also threw his weight behind the new recapitalization exercise announced by the commission, saying that the new capital regime, when concluded, would enable companies to do big-ticket businesses as against serving as agents to foreign insurers which is currently the norms.
Speaking at the Capital Market Association of Nigeria Quarterly Forum tagged: “Deepening insurance penetration through effective broker engagement”, in Lagos, over the weekend, he said that “the step would not only help to consolidate the sector with provision of more buoyant opportunities for large ticket transactions but would also position insurance companies in the sector as big players, instead of serving as agents to foreign insurance underwriters.”
According to him, insurance brokers would have more creative roles to play towards harnessing the benefits of the new capital base requirement, adding that the Nigerian insurance sector if well-positioned would take its rightful place in the country’s economy.
He said insurance companies at the end of the recapitalization program would be able to take up opportunities hitherto taken by foreign companies as he urged the NAICOM to implement the compulsory housing and transport insurance policies to deepen insurance penetration in the country.
The insurer stressed that NAICOM should be well-positioned to drive the implementation of the compulsory housing policy, which was valued at over one trillion naira. He said the various efforts aimed at boosting the insurance sector’s contribution to the Gross Domestic Product (GDP) to surpass its present 0.1 percent level would be accelerated with the implementation of the new capital base.
He expressed optimism that insurance penetration in the country would surpass one percent with proper implementation of the new capital base as players would be forced to harness new grounds. He stressed the role of brokers in the sector, which he said the sector’s earnings were mainly due to the contributions of the brokers that stood at 80 percent.
“Without the brokers, there won’t be insurance. They contribute about 80 percent of the earnings. We place a very high premium on brokers,” he said.
The brokers help in product development, maintenance of the high vast network, enhanced negotiation, helps towards risk mitigation and help clients to stay updated on policies and regulatory developments, among others.
“The retail and commercial Insurance brokers are rightly positioned to take up the fresh challenges the new capital requirement would throw up, for the utilization of new opportunities to expand insurance penetration in Nigeria,” ogbodu noted.
Ogbodu assured stakeholders that Sunu Assurances Nigeria would surpass the new capital base of N10 billion, adding that “Sunu is positioned to take up the new challenges, having been rightly placed to meet up with the new capital requirement of N10 billion, even as the framework for the new policy was yet to be released.”
The Executive Director, Strategy and Performance, Karim Dione, debunked the negative appellation given to brokers, saying “a lot of them are doing the right thing.”He stressed that the recapitalization effort of the insurance sector, he said: “The movement to recapitalize, for the Sunu Group, makes sense. The enforcement of regulatory policies also makes sense.”
He said the players needed to have profitable businesses adding that the potential in Nigeria in terms of size, potential, and resources was enormous for the Sunu Group ready to meet the new capital base.“SUNU is here to stay because Nigeria is the real market in Africa in size, potential, resources and population,” Dione said.
He said the company’s fully paid-up capital presently stands at N7 billion against N10 billion required for general insurance, adding that the company would fully comply with the commission’s policy but needed more clarification from NAICOM on its shareholder’s funds or paid-up capital.
Mr Ladi Oyekan of YOA Insurance Brokers, while responding to some issues raised, said that ideal insurance penetration had not been attained based on the country’s penetration, but lamented low disposable income eminent in the country was affecting insurance penetration.
Mr Femi Ojeremi, Farble Insurance Brokers said that Nigerians “like putting something down and having something in return”, which does not support insurance.“Nigerians are wasteful in things that are irrelevant, many people have multiple phones and recharge them with an average of N60,000 annually but they cannot pay N5,000 insurance premium annually to protect or cover their lives,” Ojeremi said.