Mr. Adeyemo Adereni is Managing Director of New Alliance Brokers. In this interview with Rotimi Agboluaje in Ibadan, the Chartered Arbitrator and Chairman of the Nigerian Council of Registered Insurance Brokers (NCRIB),Ibadan Chapter. says early insurance practitioners created bad image for insurance in Nigeria. Excerpts:
As an insurance expert, can you tell us the role of insurance in an economy?
The basic role of insurance in an economy is just a kind of risktransfer mechanism. If you are a manufacturer or an individual that has assets; you will discover that these assets will definitely be exposed to lots of risks such as: a risk of accident, fire, flood and others. For those who want peace of mind, the best way to protect any asset you have pecuniary interest is to transfer the risks to somebody to carry for you; that ‘person’ is an insurance company. Basically, insurance brokers are the intermediaries between the insuring public and the insurance companies. We are the interfaces between the insured and the insurer. We are professionals because, for every omission or commission we do, an insurance broker can be held liable for it. To illustrate my point; let us look at it as if you are my client, you insure your car and I get you a better company and premium. If the event you insured your car against, occurred, it is my duty to pursue your claim to the point of settlement.
Every business has its challenges. What are the challenges in the insurance business?
Honestly, it’s hasn’t been rosy. There are many challenges but Let us start from the apathy in the business. When you consider the apathy of Nigerians to insurance, it is really a big challenge. In this sector we are selling service, an invisible product and with the attitude of Nigerians towards insurance It is very difficult selling insurance. With ten millions corporate clients and some state and federal governments that really take insurance seriously because they buy insurance to cover their workforce and assets. So, it has not been rosy.
How has it been in Oyo State In terms of insurance penetration?
Insurance penetration is very low in Oyo State. The state can’t be detached from Nigeria, so what is happening in the whole country reflects in the state and I know the state as one with poor attitude to insurance, it’s so bad. Even with the compulsory insurance like motor vehicle insurance, people still go to licence offices to obtain covers from fake agents. But of recent our regulator-the National Insurance Commission (NIC) has really stepped up efforts to ensure that most of these fake operators are wiped away from the market. Now, when you are talking about insurance penetration in Oyo State it’s nothing to write home about. But with my NCRIB we are trying to partner the state government. We really want to work with the government so that, at least it can assist us on the enforcement.
As the helmsman of NCRIB what are your plans for members of the Council?
There is an adage that says ‘uneasy lies the head that wears the crown’. Sometimes you criticize when you are outside the system; by the time you get into the system, you will know that it is not easy. In the next few days it will be a year that I assumed office. However, with my five-point agenda, I really want to work in tandem with some professionals. Currently, we have about five compulsory insurance: the occupier liability, builder liability, medical professional indemnity, the third party motor insurance and then the group life. There is a new pension act which makes it compulsory for all the employers of labour to put in place a group life assurance scheme for the employees while in service. The scheme will provide a kind of compensation to the estate of any employee who died while in service.
Does this have anything to do with the Pension Act of 2004?
Yes. The major provision of the Act is group life assurance scheme. It is even an offence, with the recent amended Pension Act 20l4 which was assented to by the outgoing President, for an employer to fail to put in place the scheme for his or her staff. Instructively, in the amended act the rate of contribution has increased from 7.5 to l0 per cent and that of employees has been jacked up marginally from 7.5 to 8 per cent. Interestingly, group life is one of the compulsory insurance. Now, we are looking at each of the compulsory insurance covers and want to partner the professional bodies concerned. For example, we will work out the issue of medical indemnity which is compulsory for all doctors who have a clinic or an accredited NHIS (National Health Insurance Scheme) provider. We will work with such an organization and partner the Nigerian Medical Association (NMA) to let its members be aware of the reason they need to put in place this particular insurance cover.
On builder liability, we are looking at COREN (Council of Registered Engineers of Nigeria), the Nigerian Institute of Architects and a whole lot of other professional bodies. We want to use them as platforms to really get to their members. Then, on the occupier liability, as an owner of a building, it is compulsory that you such owners insure their liability for the usage of property; a tenant can incur a liability which the landlord can be precariously liable. Then if the owner of the building has that cover in place which is compulsory, definitely he will be covered. We are looking at partnering the Nigerian Institute of Surveyors and Valuers. The body has a whole lot of properties it manages. On the issue of third party motor insurance, for this we want to partner the police and the Federal Road Safety Corps (FRSC) to let them see why every motorist in the country must have a genuine third party cover that takes care of liabilities towards road users. At the governmental level, we want government to see it as its responsibility to ensure that all the compulsory insurance is enforced.
Apart from enforcement, what other things are you expecting from the incoming Buhari administration?
Well, on the insurance sector, the outgoing government really tried. Let’s start from the Nigerian Content Act that was signed into law in 20l0. It really afforded a lot of brokers to partake in the oil and gas business. With the Local Content Act, it gives us leverage to operate in the sector. Unlike before, when you talk of insurance of NNPC (Nigerian National Petroleum Corporation) small insurance brokers were not considered. NNPC normally dealt with rich brokerage companies that have foreign partners. But with the local content act which makes it compulsory that a certain per cent of insurance has to be insured locally.
People like us now have the opportunity to partake in the oil and gas business. Most importantly, my expectation from the incoming government is if at all the incoming government can’t improve on it.
It must ensure that it maintains the tempo. It must realise that insurance is very important as a form of risk-transferring mechanism. In foreign countries, insurance business is more viable than banking but reverse is the case in Nigeria. This is not a fault of mine; I can’t apportion blame but the early practitioners didn’t help the industry. We are just trying to launder image of the sector.
Looking at insurance even with the advent of ‘no premium, no cover’ policy for you to get cover you must pay premium. Insurance is not being sold on credit. When we just started we had some challenges but as I’m talking to you now a few Nigerians that do insurance know that you have to pay premium.
Can you shed more light on ‘no premium, no cover’ policy and when did it start?
All professions have laws that guide them. Just like the way banks are regulated by the Central Bank of Nigeria and the Security and Exchange Commission regulates the capital market, the National Insurance Commission regulates us as insurance practitioners. The policy had been a law since l99l by the Insurance Decree of l99l which was later amended by the Insurance Act of 2003. So, because of the low belief of Nigerians in insurance, there was a kind of market agreement between the operators that you can grant your clients and pay premium within a specified period. But when the operators now felt that if we continue in this way, most insurance companies might go under. We now started enforcing the law since January 20l3.