THE KPMG INSURANCE CONFERENCE 2017.
AIGBOJE AIG-IMOUKHUEDE’S VIEWS WERE NOT ENTIRELY CORRECT.
The KPMG insurance conference 2017 held recently in Lagos recently and one of the presenters; Mr. Aigboje Aig-Imoukhuede was represented by Mr. Oyebode Oyeniyi.
Mr. Imoukhuede is an accomplished professional and his positive footprints in the financial sector are in the public domain.
His interest in the insurance industry is also well known. While Mr. Oyeniyi’s position on the need for greater innovation, collaboration and a customer-centric approach by insurers in order to reposition the sector cannot be faulted, certain aspects of his presentation need to be further examined. His position that insurers should increase their capital base to five times what they currently have in order to retain more in the local market is arguable as current regulation mandates insurers to completely exhaust all assumed risks that are beyond their capacity in the local market prior to ceding same abroad, in addition to their reinsurance and other arrangements.
Moreso, a huge capital base in a challenged economy may not be appropriate allocation of capital, in a country where even the government hardly pays premium promptly on their assets.
However, there is nothing wrong with higher capitalization by operators.
We consider the risk based supervision approach by the National Insurance Commission appropriate for the industry’s present circumstance while efforts are on hand by all stakeholders to deepen the market penetration.
In a publication by Thisday of Friday March, 3, 2017 Mr. Oyeneyi was quoted to have said this at the conference
‘People have grown to trust their banks, so when as an insurance company you ride on the back of a bank, you are more likely to be accepted than going alone. Today the regulator has stifled almost all the channels that will enable insurance products to be distributed through other channels even through telecommunication’
This is not correct.
The insurance sector has had its share of problems just like other sectors. The industry has gone through earlier phases of recapitalization, mergers and acquisitions just like the banking sector.
People do not really trust their banks more than their insurers and most insurance customers who have engaged the services of licensed insurance brokers have experienced much higher levels of satisfaction and trust as against those who have opted to deal directly with insurers.
Some of the most stable and profitable insurers in the industry today did not ‘’ride on the back of banks’’, and others that tried to do so were severely impacted when the fortunes of some of those banks nose-dived.
The insurance sector in addition to acquiring the right skill-set and adopting other measures as noted in this conference must strengthen its processes to become swifter especially with regards to claims issues, in line with current business best practices. There is a need for greater collaboration with the brokers who remain closest to the customers and any market penetration strategies both by regulators and practitioners should have their buy-in for maximum effect.
The National Insurance Commission should be commended for its role in stabilizing the industry.
The commission has not stifled other distribution channels but only rightly posits that such activities should be properly supervised in order not to erode all the gain the industry has achieved to date and to protect the policyholders as most insurance benefits are back end, when a claim occurs and not upfront, a term that’s very popular in related sectors.
Let’s not forget. An insurance company or broker cannot opt to sell banking products on their own terms, without their regulator’s approval and supervision.