CONTENTS Lagos.
X-RAY PROFESSIONAL ADVISERS
TEL: 01-7375123
MR. M.A. SIYANBOLA
Mobile: 08023430530, 08057661560
ONE ON ONE
MR. B.O. DUDU
Email: theriskshield@yahoo.com,
TREND
DEACONESS K.A. BANJO
www:riskshieldng.com
THE PUBLISHER’S SUITE
info@riskshieldngr.com
OPINION BOOKSHELF
The Risk Shield is a monthly
ISSN 1595-3726
publication of CORPORATE TEAM
RISK SHIELD LIMITED, Plot 31,
All typewritten reactions should be
ROLAND VALENTINE OKORO
Ailegun Road, Beside Ronik
sent to the above address.
OLUWASEUN OMOLADE MISS PATIENCE SHODIPE
Bookshop, Ejigbo, P.O. Box 4164, Marina,
Copyrights reserved.
BENJAMIN IGBUDU
X- R A Y
Get Inspired: 5 steps for Building up your Motivation
A
MBITION, Drive, Determination and Hunger are the words that describe why we do the things we do. There are always reasons or factors that cause us to behave in particular ways or to pursue certain activities rather than others. These underlying causes are collectively referred to as motivation. Sometimes you are unable to complete work on schedule or up to the quality you expect of yourself, it may be because you are suffering from weak motivation. External factors like people’s opinion rarely work to make you feel really inspired. Rather, you need to find some internal means of lighting that fire again and increasing your motivation. 1. Identify Reasons for Doing Something Motivation is all about the reason “why”you are trying to carry out an activity or reach a goal. Therefore, unless you know why you are doing something, you won’t feel compelled to do it. Stop and consider the reasons for your actions. What is the end result you are hoping to achieve? What is your desired
4
outcome? Articulate it clearly to yourself. 2. Put Together a Plan Once you have a goal in mind, you need a plan for reaching it. It’s like using a road map: Without driving directions you might arrive at the intended destination, but it’s probably going to take you a lot longer using a map to plot out your course will make you more efficient and more productive.
•ROLAND VALENTINE OKORO
3. Write a Timetable for Implementing Your Plan It’s not enough to simply develop in theory. Plot it out by writing it down in black and white. For Instance, if your plan is to write one chapter of a dissertation each week, don’t just leave it at that. Get out your diary or day planner and write down the target deadlines. Or type up a timetable with all the relevant deadlines, print it out, and hang it above your computer, Writing things down or having a visual schedule will incite action. 4. Create an Incentive Plan Incentives like monetary rewards don’t necessarily build up motivation, but promising yourself a reward for doing good work. The key is picking a reward that means something to you. 5. Use Negatives as Motivation Many of us slack off at times when we are feeling down or upset. Perhaps something bad happened or our friends or family has made us feel bad about ourselves. For instance, let’s say you got fired from a job, and your parents rather than comforting you, say, ‘what’s the matter you weren’t good enough: This might make us want to go hide under the covers, but you can actually turn this negative into a positive. Just say to yourself, “Ï’ll show them.” Then go out there and do what it takes to improve your situation.
The Risk Shield
TREND
Stakeholders Eulogise Okpue @ 60
*Okpue
I
T was who is who in the insurance industry on the 12th April, 2010, at the Ikoyi highbrow office of Insurance Brokers of Nigeria (IBN). th The occasion was the 60 Birthday celebration of Mr Prosper Okpue, Executive Vice Chairman, Insurance Brokers of Nigeria. Some industry Chieftains at the event are Dr Remi Olowude, Executive Vice Chairman, Industrial and General Insurance PLC, Mr Oye HassanO d u k a l e , M a n a g i n g D i r e c t o r, Leadway Assurance Company Limited, Mr Jacob Erhabor, Managing Director, International Energy Insurance PLC, Mr Dolapo Balogun Group Managing Director, Equity Assurance PLC, Mr Tope Smart, Managing Director, NEM Insurance PLC, Mr Wale Onaolapo, Managing Director Sovereign Trust Insurance PLC, Mr Eddy Efekoha, Managing Director, Consolidated Hallmark Insurance PLC and Mr Shakiru Oyefeso, Managing Director, STACO Insurance PLC. Also, at the event are Mr Austin Enajemo-lsire, Managing Director, Standard Alliance Life Assurance Limited, Mr Alphonse Okpor,
The Risk Shield
Managing Director, African Alliance Insurance PLC, Mr Olumide Falohun, Managing Director, Equity Assurance PLC, Prince Lafor Olateru-Olagbegi, Managing Director, Oceanic Insurance Group, Mr Yinka Bolarinwa, Managing Director, Law Union & Rock Insurance PLC, Mr Rasheed Balogun, E x e c u t i v e D i r e c t o r, O a s i s Insurance PLC, among other top industry bigwigs. Speaking at the event, Dr Remi Olowude, Executive Vice Chairman, IGI, said, “Ï have known Prosper for over 30 years, we’ve had a rewarding relationship, infact, the relationship is without blemish. The celebrant is a thorough Energy Insurance Expert. Well, Prosper is rich, so, I pray for long life for him.” Prosper is an accomplished specialist in Risk Consulting and Insurance Broking practice with expertise in Energy Insurance His combined experience spans a period of over three decades. He started his working career in IBN (then C.T. Bowring Limited) in 1973. Apart from IBN, he had a stint at Hogg Robinson Nigeria Limited where he held the position of Controller and Head of Oil & Gas Department. He is the driving force behind the
His combined experience spans a period of over three decades
transformation of the company into its current position as Nigeria’s foremost and leading Energy Insurance Brokers. It was recognition of this capability and Nigeria’s rank as the World’s fourth largest producer of Crude Oil that informed Marsh’s decision to establish the Marsh Marine & Energy Centre for the Africa Region in IBN. He received wide and intension academic and professional training in Risk Management and Insurance both locally and overseas. In particular, he attended the General Insurance Management Course in 1976 at the University of Nottingham and the Chartered Insurance Institute, England. This was followed closely in 1977 by a course in Risk Management Concept & Techniques at the Chartered Insurance Institute’s College of Insurance, Surrey, England. In the same year, he attended a course in Marine Insurance at Richard Hoggs International, London Two years later, he attended a course in offshore captives and Insurance Administration at Agip, Milan, Italy. He further sharpened his management skill in 1982 through a course in Management Development at Ashridge Management College, England. He capped his academic qualifications with Bachelor’s and Master’s degree in Law from Lagos State University and Ambrose Alli University, Ekpoma, respectively. Prosper is a Past President of the Nigerian Council of Registered Insurance Brokers. It was during his two-year tenure that the NCRIB Act was passed into law by the National Assembly.
5
TREND
Sovereign Trust Pledges To Sustain CSR Function
*Onaolapo
A
s a socially responsible corporate citizen, the management of Sovereign Trust Insurance Plc has assured that the insurance company will always uphold its Corporate Social Responsibility (CSR) function. The company’s Managing Director, Wale Onaolapo, who gave this assurance in Lagos, stated that the organisation has in the last couple of years recorded remarkable successes in CSR initiatives and top_notch events in the country. The insurance outfit has endorsed an award category for insurance correspondents in Nigeria in perpetuity. The Diamond Award for Media Excellence (DAME) for the best Insurance Reporter of the Year is designed to celebrate excellence in journalism. The first ever International Jazz Festival in the country was sponsored by the company in 2008 tagged the Lagos International Jazz Festival. The company has sponsored some lucky Nigerians to the 2008 African Cup of Nations in Accra, Ghana; just as it was the official Insurer for the Nigerian Contingent to the All African Games in Algiers, Algeria in 2007. Sovereign Trust was the Pioneer Sponsor of the Weekend Celebrity Show put together by Media 15900 Limited in 2008. The Winners who
6
emerged from a nationwide draw were treated to a first class weekend treat befitting of celebrities. The company continues to play a key role in the annual age group swimming competition instituted by the Dr. Ebosie Foundation as one of the major Sponsors and official insurer for the swimming competition. In the area of health, the company has over the years been partnering with a Non_Governmental Organisation known as the Teenage Life Foundation in creating awareness amongst Nigerian Youths on the need to have an HIV/AIDS free society. The University of Ibadan branch of AIESEC continues to enjoy positive collaboration on an annual basis from the company on all Leadership symposia and health related issues. More recently, Sovereign Trust rehabilitated the once Shitta Roundabout in the Surulere Local Government Area of
capacity in the industry. At the end of the exercise, the company was rated A_ by the international rating agency, the Global Credit Rating (GCR) in 2007, 2008 and 2009. The considerations for the rating were based on the high claims paying ability, the good mix of business across the risk classes, high profile of the multinational oil and downstream clients, increased underwriting capacity strengthened by the new capital base and geographical spread of the branches. As part of plans to make the Sovereign Trust brand a household name nationally, the management has set up machinery for establishing branches in all the major commercial cities in the country. To date, the company has presence in Lagos with four Area offices in Apapa, Surulere, Ikeja and Lagos Central with the Head office on Victoria Island. Other cities include: Ado_Ekiti, Akure, Ibadan, Abeokuta, Benin, Port_Harcourt, Asaba, Umuahia, Aba, Enugu, Bayelsa, Warri, Jos, Kaduna, Kano and the Federal Capital Territory, Abuja.
Lagos State. One very critical area the company has placed much emphasis on is the development of a versatile and well_qualified workforce. The insurance company is blessed with a very dynamic and well_articulated workforce comprising of varied and highly skilled professionals who are constantly exposed to human capacity building. Just immediately after the recapitalisation of insurance companies in the country, Sovereign Trust submitted itself to a thorough solvency and liquidity examination to ascertain the level of its
The Risk Shield
TREND
Climate Change: It's Time to React — Efekoha M
r Eddy Efekoha, Managing Director, Consolidated Hallmark Insurance PLC, in this Interview with Risk Shield, touched several issues affecting the Industry. Excerpts. In one of the recent conferences of African Insurers Organisation, it addressed the issue of catastrophe. Are Nigerian insurers doing anything to make products available for unexpected catastrophe, or losses from climatic change? AIO has done something on that, but I am aware the Nigerian insurers are planning something in that line too. We have accepted that it is a challenge that we equally need to address in the local market. I want to belief that at the end of the day, we may have committees set up to begin to advance it. This risk is here with us, you cannot really quantify this issue of climatic change, now is the time for insurance companies to react. Experts have been emphasizing the need for local insurers to address their risk taking, most especially the issue of rate cutting, what is the way out? I think issue of rate cutting has been there for sometime, some have argued that it is a case of working on the principles of basic economics, that is, if they get this much and only suffer this much, therefore, they have so much profit, they don’t want to know that rate cutting exists, they have waited this long, no major loss. Some group are saying that when it happens, some will soon bite their fingers, that those who accept risk below the required premium will find out when they are hit by this claim, they don’t have enough pool to pay. The nearest that had happened so far, is the Nigerian Bottling Corporation incidence. Some had said if they had known, they would not have accepted the risk, yet all were been driven by the past that it never happened, it will never happen, and that if it happens it will not be to this magnitude. But we were all shocked that it happened and the magnitude was beyond our imagination. For me, insurance is still very conservative, those who want to do it outside the rule, one day, and it might be too late. I think we should always look at the most economic rate to charge. So far, the compulsory insurance laws had only been inaugurated in two states, what can be done to enhance its implementation? Firstly, I will say that the National Insurance Commission has done well by bringing the Market Development Restructuring Initiative scheme in place, it is not easy to come with a new strategy, concept initiative, especially at growing a market that is not ready for it because of other challenges. The capital market crashed, if anybody thinks that the construction market has not crashed, I think we
The Risk Shield
should look at the pages of the newspaper. Notwithstanding, we must prepare for it, and in preparing for it, NAICOM came up with it. The official launch in Abuja was well attended by stakeholders, those who can promote it. And I knew right from then that it was intended to be promoted on regional basis. The launch in Ibadan was actually pushing what they had planned to do which was commendable. The compulsory insurance building insurance, Nigerians need to be aware of this product, almost everybody is talking about awareness today. The Chartered Insurance Institute of Nigeria , the Nigerian Insurers Association, they are not promoting any company above the other but promoting what binds us together. There is need for so much awareness that those going into building construction will know that when involved in the construction of a particular type, they need insurance, and if they don’t, these are the penalties. It just needs to be pushed by everybody. If well pursued, it will enhance our market penetration, grow the industry to a size were everybody will be very happy. What are the duties and benefits of the insured, most especially under this compulsory building insurance? The benefits are enormous. The owners of these projects are custodians of the risks. For instance, if I put my hard earned money into a building project bearing in mind I don’t have excess but just enough to finish this project. If I build without transferring the risk that could bring that building down even almost at the point of completion, that means, I have wasted all my hard earned money, I cannot reconstruct. First it the benefit to the owner of the contract, in fact the owner is not doing the insurance company any good, rather, the insurer is doing the owner of the project a lot of good. That is because the man is only going to pay a fraction of the entire project as the arise from earthquake or whatever. The present climatic change we are experiencing, no one could have thought Nigeria could experience anything like this, we have had flood in places where we should not have flood, we also have negligence workmanship contribution which is the premium. And in the event of this collapse, which could, activities, you can have a defective material etc. if one fails, in the absence of earthquake, it can bring the property down. Not only will the owner loose, but some could be injured or killed in it, properties of third parties could be damaged. That is why the regulator has taken interest in it that we need to protect our brothers and sisters because each time we have building collapse, it is not the owner of the building that dies, but the workers or other passers by. All of us will benefit including the government because in the presence of insurance, economic waste will be
•Efekoha reduced, therefore, more contribution to the Gross Domestic Product will be achieved. Considering the present local capacity, how attainable is the 70 per cent oil and gas retention in 2010? It depends on how you define this target. When we define the gross premium income in our market, you will find out that part of that premium is reinsurance premium. If therefore you are looking at the 70 percent as the gross acceptance by the insurance company out of which maybe 40 or 60 per cent will be reinsured, why not, even the 100 per cent can be insured with us, we can say the 100 per cent can be insured with us because there is no insurance industry that can thrive in the absence of reinsurance. Even the reinsurance companies reinsure themselves. When we are talking about retention, I want to believe it is the net retention, this market has not developed enough financial capacity to cope with that, we will be failing in our duty if we work against the principle of insurance which is spreading all the risk. The risk is continuously spread, so I should take just enough for my retention. I will say 70 per cent within the meaning of insurance, yes it can be retained, when it is retained by the local insurance companies, what needs to be reinsured will be reinsured. How involved in Consolidated Hallmark in the oil and aviation business? That is one area that we have really done well. It is still a capacity limited sector in our market. We cannot expose the entire shareholders funds to that class in spite of the increase in the local retention, that is why we still reinsure some of these businesses.
7
TREND
M
a n a g i n g D i r e c t o r, Ghana National Petroleum Corporation (GNPC), Nana Boakye Asafu_Adjaye, has said that the insurance companies in West Africa lack the financial capacity and the technical knowhow to respond to the insurance needs of the oil and gas industry in the sub_region. Asafu_Adjaye paint this gloomy picture about the capacity and readiness of the local insurance industry to respond to the risk management needs of the oil and gas industry, while speaking at West Africa Insurance Companies Association (WAICA) conference in Ghana recently. He presented a paper on “Oil and Gas Discovery in West Africa In Relation to National Development: The Insurance Industry Response to Risk Management Concerns”. He said “Today, if you asked me if our national and sub_regional insurance markets have the financial capacity, the technical know how to respond to the insurance needs of the oil and gas industry within or borders, I will say emphatically, “No!”. He adduced reasons for this gloomy assessment noting that the capitalisation of our local insurance and reinsurance companies are woefully inadequate. The GNPC boss therefore called on the insurance regulatory authorities in our various countries to serious think about significantly reviewing upwards the capital requirements of the insurance companies operating in their countries. Besides, he recommended that those companies that are unable to raise additional capital should be encouraged to consolidate with others to achieve the critical mass necessary to make them competitive.
8
‘West African Insurers Lack Capacity For Oil & Gas Risks’ “Additionally, the concept of local or sub_regional insurance pools may need to be looked into. If such measures are adopted then it is conceivable that the local industry can remain competitive vis_à_vis their international counterparts who will be more than ready to take out as much of the premium dollars the insurance for the oil industry is expected to generate, that is, if we allow them by not putting our houses in order,” he stated. Asafu_Adjaye also said that the our insurance laws being operated by countries in the sub_region would have to be critically reviewed to incorporate stringent requirements for local content and participation in all oil and gas insurance contracts.
•Agbenyega WAICA Boss
He further warned that “If these remedial measures are not urgently addressed, then the countries in the sub_region will see the worsening of the perennial problem of premium flight from our markets.” Apart from significantly improving the capitalisation of the local insurance companies, he said that the local industry can benefit from collaboration with experienced players in the oil and gas markets overseas. He added that these overseas markets can over time help nurture our local markets through well structured relationships that emphasise technology transfer and building capacity. In view of the fact that the oil and gas business that requires the investment of huge financial resources while also inherently fraught with tremendous risk of loss of property and/or life, he sad the industry is conscious of the need to make risk management in general and insurance in particular, an integral part of its financial planning and management systems. In order to adequately respond to the challenge of designing appropriate risk management systems for the oil and gas industry, Asafu_Adjaye pointed out that the insurance industry need to address certain important issues such as the identification and understanding of the nature of the hazards for which risk management solutions need to be designed. While encouraging the design of appropriate training programmes to transfer technology and know how to local underwriters; he encouraged the arrangement of appropriate re_insurance relationships to complement local capacity and also deepen local technical expertise.
The Risk Shield
TREND
Lasaco Facilitates Prompt Claims Payment
T
h e M a n a g i n g D i r e c t o r, LASACO Assurance plc, Ladipo_Ajayi, has assured that the insurance company will continue rendering excellent services to the customers, noting that the underwriting outfit has been able to deploy best t e c h n o l o g y m o n e y c a n b u y. Ladipo_Ajayi, who spoke during a chat with Risk Shield in Lagos, noted that “We have our LASACO global policy now which is an ICT programme that makes LASACO accessible to our customers round the clock 24 hours which will encourage patronage and promote service delivery. Once we have stable electricity, most customers can access LASACO online any where at any time and get their transactions conducted. If you can notify us of your claims, and you can get your documents online, it saves time and there will be no excuse for delay. This process reduces transaction time and that is the cutting edge we are trying to develop.” Ladipo_Ajayi also confirmed that the insurance company does not have any unpaid claim in the oil and gas insurance
•Ladipo-Ajayi business up till the present time. He allayed fears being expressed in some quarters that the Nigerian insurance companies might not be able to pay claims arising from oil and gas risks, saying “such commentators have not really understood the issues involved.”
The LASACO Assurance boss confirmed that the local insurers are still at the stage of 40 percent local content while the others who have 60 percent are the foreign insurers. “You cannot have just 40 percent and dictate to those who are having the majority which is 60 percent. So, all the terms and conditions are set from the London market which is the capital of insurance world. The adjusters are appointed from abroad. They are only being assisted by the local operators. It is the foreign adjusters who determine what the level of compensation should be,” he explained. Speaking from the perspective of LASACO, he asserted that “we have never been found wanting in paying claims in oil and gas and I challenge any one to prove us wrong in this regard. In actual fact, prompts claims settlement is the major focus of our operations and I am happy about the reputation we have built in this regards. We want people to believe insurance works and prompts claims settlement is a major requirement of our operational strategy.”
African Alliance Hits 50
T
he oldest Life Assurance Company in Nigeria, African Alliance Insurance Plc will celebrate its’ 50th Anniversary this month Since May 1960, African Alliance Insurance has contributed positively to the development of the Nigerian Economy, maintaining a leadership in the Insurance Industry. Just as the advent of African Alliance in the indigenous Insurance Industry in the year of Nigeria’s Independence encouraged many others to explore the opportunities available in the Country’s then fledgling economy, the Company’s robust Product Bouquet, including our innovative Takaful (Islamic Insurance)
The Risk Shield
range of Products and various other value – add Mortgage, Life Assurance & Investment Services have created an awareness of the vast untapped potential of the Nigerian Insurance sector and provoked our many competitors to follow our lead. From its’ humble beginnings five decades ago in its’ Breadfruit Building on Lagos Island, African Alliance has carved a niche for itself as the foremost Life Specialist Assurance Company in Nigeria and epitomizes what excellent and professionally delivered insurance services represent. With 17 Offices nation-wide and a vigorous expansion programme underway, African Alliance is dedicated to increasing its’ market
*Okpor MD, African Alliance penetration to the utmost and is poised to bring insurance to the grassroots with a number of new financial Products and Services tailored to encourage maximum customer acceptance and participation. In September 2009, African Alliance got listed by introduction on the floors of Nigerian Stock Exchange.
9
TREND
Insurer Endorses Increased Funding For Fire Fighters
I
n realisation of the vantage position being occupied by fire fighting outfits in the economy, the government at all levels have been called upon to increase the funds being made available to the fire fighters. T h e E x e c u t i v e Vi c e Chairman of Industrial And General Insurance (IGI) Plc, Mr. Remi Olowude, gave the advice while receiving members of the Fire Protection Association of Nigeria (FPAN) and representatives of the Lagos State Fire & Safety Service who paid him a courtesy visit in his office in Lagos recently.
•Olowude He stated that “I particularly endorse the call on increased funding of fire fighting outfits in the country as well as the need to accelerate the passage of the Bill on Fire Service Act 2003,” he stated. Olowude also charged the security personnel in the country to undergo fire fighting training in order to be adequately equipped to combat
fire incidents anytime they occurred. While decrying the increasing rate of fire incidents in the nation, the IGI boss pointed out that the inadequacy of modern fire_fighting equipment and fire stations have made it imperative that the precarious situation be given urgent attention to minimise the annual huge loss of human and material resources. He equally enjoined the media to join the crusade to create public awareness of the hazards of fire in society, saying: “With required training and an enthusiastic nation, we can expeditiously and qualitatively achieve our objective of ensuring that knowledge of fire safety is shared in a manner that raises the level of safety consciousness in Nigeria.” Olowude, who was recently inducted as the new President of FPAN, promised to collaborate with the fire service community to ensure that the public becomes well aware of the perils of fire, amongst several other disasters that confront the society. Mr. Dominic Aigbogun, Chairman of FPAN, who led the visiting team, stated that the association’s projection was to promote FPAN in industries and ensure its certification on Fire Safety.
Local Content: Insurer Advocates Clear Definition Of Market Capacity
T
he Federal Government has been advised to ensure that what is meant by market capacity with regards to the local content policy in the oil and gas industry is clearly defined to avoid the problem of mis_interpretation. Olusola Ladipo_Ajayi, Group Managing Director, Lasaco Assurance, stated that the clear definition of market capacity is essential to avoid ambiguity while presenting a paper at Education Conference of the West African Insurance Companies Association (WAICA) in Accra Ghana recently. He spoke on “The Preparedness of the Insurance Industry in West Africa to respond to the Oil Boom in the Sub Region.” He said that the clear definition of market capacity is essential while operators must learn to pool their resources together even though they are operating in a highly competitive market.
10
Ladipo-Ajayi also charged the local operators to not only train their employees, but should also ensure that they retrain and retain these employees in order to develop the expertise required for this high risk business. He further recommended that the bidding process for oil and gas insurance contracts must be specifically provided for in law or Government regulations as contained in the Nigerian content department short term directive of 2006. It states that “Henceforth, all projects and operations as relates to the Insurance of Risks in the Oil and Gas industry must i n v o l v e N i g e r i a n Insurers/Reinsurers/Brokers/Adjusters/Su rveyors and demonstrate strict compliance with the provisions of the Insurance Act 2003 as well as the Guidelines for Insurance of Risks Associated with Oil & Gas operations in Nigeria and submit a certificate of compliance issued by National Insurance Commission
(NAICOM) to Nigerian Contents Department (NCD) [of Nigerian National Petroleum Corporation (NNPC) as part of technical evaluation requirements for Insurance or Reinsurance contracts. It adds that “NAICOM verified gross underwriting capacity of Nigerian registered insurance companies must be fully utilised to the satisfaction of NAICOM to maximise Nigerian Content before ceding risk off shore.” The local content policy is to transform the oil and gas industry into the economic engine for job creation and national growth by developing in_country capacity and indigenous capabilities. In this way a greater proportion of the work will be done in Nigeria with active participation of all sectors of the economy and ultimately Nigeria will be positioned as the hub for service delivery within the West African sub_region and beyond.
The Risk Shield
TREND
Market watch with desperation brokers plan to dislodge competitors
*Sanusi
T
he brokerage fraternity of the insurance industry have to work hard to get its strategy right if it must compete effectively in the new insurance market, as consumers are keying more now on value creation. Members of the group are expected to create value in the delivery of their services which would make a consumer attracted to their offering as against dealing directly with the underwriter. Expert says, the business is changing and requires people who have something new to offer otherwise the trend may change. Teslim Sanusi, president of the Nigerian Council of Registered Insurance Brokers (NCRIB) while assuming leadership of the council some months ago said he has reviewed the new market dictates of recent which suggest that brokers may be facing extinction if it does not make itself relevant in the business of insurance.
The Risk Shield
This is against the back drop of increasing competition from a class of unregistered insurance brokers, fake operators, un_registered bank intermediaries, insurance companies and other captive agents. Before now, the insurance brokers controlled about 70 percent of the total market share in terms of premium generation, as underwriters depended largely on them to meet their annual income target. But with increasing competition and particularly after the post consolidation, not a few underwriting companies have groomed their marketing units and now depend less on brokers. “Like what two insurance company Managing Directors said, we have redefined out market so that we can depend less on brokers for businesses, hence we have designed personal line insurances and I can tell you that we are better for it”. Again, on the activities of fake and unregistered insurance brokers, the damage they claim is much considering the fact that they collect premium from the
pubic and never there to pay claims when it arise. While the impact does not end in premium lost, it also brings bad image on the insurance industry. Sanusi said in his acceptance speech during the investiture that Brokers must crush all competition through unprecedented publicity to protect and promote the function and importance of the Registered Insurance Broker (RIB). “We must drive it home to the insuring public, both individual and corporate that RIB is the best brand in both the local and international market in the field of professional representation when compared with any other group. According to him, for added value the council will use member’s annual subscriptions to rebrand and heavily publicize its members to the knowledge of the entire public.
11
TREND
•Odah
•Adejumo
•Larry Ademeso
Operators Speaks on Q1 Performance
T
he nation’s insurance industry like any other sector in the economy cannot be separated from the hoax business and political environment that characterised the countries landscape through out the first quarter of 2010. The operators had begun the year with high hopes that all things being equal, it would experience growth in business with huge premium income sine the country was not immersed in any serious political logjam. But in the wake of the year, the country found itself battling to save its democracy and sovereignty which heated the polity following the medical trip of the president and commander on chief of the Federal Republic of Nigeria, Musa Yar’adua to a Saudi Arabian Hospital. The situation brought a lot of uncertainty in the system making it almost impossible for business activities to take full swing. Insurance which ordinarily is still struggling to take prime position in the individual and corporate expenditures suffered set backs as people were not ready to spend their monies on products. According to industry analyst many people following the economic and political situation in the country had reasons to drop their insurances while those who never took insurance before never wanted to hear about it. Industry operators are however worried that their projections for the year would have been affected by the turn out of events in the first quarter.
12
Mr Godwin Odah, managing director, Union Assurance Company Limited said that the first quarter of 2010 was filled with a lot of suspense and uncertainty at the economic and political fronts. Odah said as result of instability in the political economy, businesses were paralysed as every one was in a confused state and not sure of the direction of the polity. The ongoing reform in the banking industry he stated created liquidity squeeze which made it difficult for banks to grant credit and the implication was nose_diving economy, of little or no activity. Insurance which is a major sector of the economy according to him had a fair share of the low activity as people drop their insurance takes and this he pointed affected premium generation. He however said that expectations are high in the second quarter since the political situation is gradually getting better, expecting that with the swearing in of new ministers one would expect some meaningful changes in the polity and an immediate boost in economic activities. Adeyemo Adejumo, managing director, Continental Reinsurance plc noted that for the reinsurance market the first quarter was quite dull as things did not pick as would be expected. He said the uncertainty in the Nation’s polity was not favourable to business as most people adopted a kind of “wait to see” approach and so spending on insurance was affected. According to him, the
insurance industry may not likely meet its premium target in the first quarter but definitely would make more than half. He however said that things were beginning to look up again with the settling down to office of the Acting president and the swearing in of New Ministers. He was quick to add that defining the direction of the economy is critical for the growth of business as this would be considered very seriously by foreign investors. We want confidence restored in the economy particularly for us who have foreign investors in our business, Adejumo said. Larry Ademeso, managing director, Royal Exchange Prudential life however differed in his assessment of the economy, saying that life specialist companies witnessed some growth as result of the signing of group life insurance at the federal level. Though he could not be certain about the industry figure, but said his organisation met the first quarter target even as he noted that general business companies traded on more difficult environment because of the reforms in the banking industry. On future outlook, Ademeso said “it is still peace of the grave yard” as no one is certain about the direction of the economy and with elections coming next year, there is likely to be tension. Except there is genuine electoral reform in the country, not much will happen in terms of good business, he said.
The Risk Shield
TREND
States Free To Continue With Existing Pension Schemes If…
T
he states governments are free to continue with their existing pension schemes provided that the pension schemes shall be fully funded and that the enabling legislation has been promulgated into law by the affected states. This formed part of the framework for the supervision of states and local governments’ pension schemes issued by the National Pension Commission (PenCom). To ensure that all employees in the country enjoy the benefits of the contributory pension scheme, PenCom drafted a pension law called the Pension Reform Law 2005 for state governments since the Pension Reform Act 2004 does not cover employees at the state and local government levels. As some states governments that were hitherto operating defined benefits schemes have now adopted the contributory pension scheme, PenCom issues supervision framework to ensure effective and smooth operations of the pension schemes. In the supervision framework, PenCom’s Director General, Muhammad Ahmad, states that without prejudice to any other provision in this framework, any pension scheme in the states existing before the commencement of the State’s Pension Reform Law may continue to exist, provided that the enabling legislation has been promulgated into law by the state and that the pension scheme shall be fully funded. Other condition is that the contributions in favour of each employee, together with the attributable income shall be computed and credited to the Retirement Savings Accounts (RSA) opened for the beneficiary employees. Besides, the pension funds and assets are to be fully segregated from the funds and assets
The Risk Shield
•Ahmad of the State and/or Local Government; while the pension funds and assets shall be held by a custodian duly licensed by PenCom. Every employee in the existing scheme shall be free to exercise the option of coming under the scheme or otherwise and his employer shall compute and credit his RSA with contributions and distributable income earned as at the date the employee exercised such an option subject to the regulations, rules and standards established by the commission. An employee who elects to opt out of the scheme shall approach any of the licensed Pension Fund Administrators (PFAs) of his/her choice to open an RSA; The employee who opens an RSA shall advise his employer of the details of his RSA and the designated account, specified by the PFA, into which his pension contributions are to be remitted. While any amount computed shall be transferred to the RSA of the employee, maintained with a PFA of his choice; all subsequent pension deductions on behalf of the employee, together with any voluntary contributions by the employee, shall be remitted by the employer to the designated account
specified by the PFA. From the commencement of the State law, all investments in assets shall be strictly regulated by the rules, guidelines and standards issued by PenCom. However, the State scheme may continue to maintain its investment portfolio, prior to the commencement of the State Pension Law. The States and Local Governments shall undertake to the Commission that the pension fund shall be fully funded at all times and any shortfall would be made up within 90 days. Upon failure of the State and Local Governments to make good of any shortfall referred above, the Commission would mandate the Accountant General of the Federation to deduct as source an equivalent amount from the State’s and Local Government’s share of the Federation Account and remit same to the Custodian of the PFA/PFAs managing the State’s and Local Government’s Scheme.
13
TREND
Niger Rakes ets leaps ...Ass In N6.6b to N15B
N
iger Insurance Plc generated a premium
income of over N 6.6 billion in 2009 representing a growth of about 25 percent over the amount generated in 2008 despite the economic meltdown, the company’s Managing Director, Sir Justus Clinton Uranta said. The underwriting profit of the insurance company also rose from N 2.4 billion in 2008 to N3.4 billion in 2009 representing over 40 percent increase, Uranta disclosed while addressing journalists in Lagos recently. In appreciation of the need to constantly improve the financial base of the company, Niger Insurance ranks amongst the financially solid insurance companies in the country with an asset base in excess of N15 billion. As the current global meltdown is a reality that all individuals and businesses alike have had to face, he assured that the insurance firm is quite aware of the financial implications of this reality and the need to maintain an effective financial management to be able to weather this storm. Nonetheless, he informed that Niger Insurance Plc successfully maintained its core operations of risk bearing and claim settlement due to its financial stability and operational efficiency. The company paid claims of N1 billion in 2009 representing 15 percent increase over the 2008 figure. In view of the fact that Niger Insurance prioritises human capital development, the company has in its employment well qualified and
14
seasoned professionals willing to go extra mile to exceed customer’s expectations. The importance placed on human capital development has seen its staff exposed to both international and local •Uranta training. Recently, 15 of the capa company’s staff passed the city examinations of the Chartered building Insurance Institute of Nigeria and (CIIN) to become chartered insurers. acquisition of up Determined to continued rendering to date information and excellent services to the customers, communication technology facilities, the company is currently undergoing and an improved investment policy a corporate transformation and through strategic horizontal and re_engineering which is termed vertical diversification. Niger Enterprise Strategy Towards this end, plans have been Transformation (NEST). The key concluded to ensure that customers elements of this project are are able to communicate and relate networking through strategic with the company on line real_time partnership, integrity being the through its recently acquired hallmark of its corporate platform within a very short time stewardship, having a global from now. As a forward looking competitive outlook, empowerment underwriting firm, Niger Insurance to build a successful future and has also repackaged its travel reliability being its signpost for insurance cover in partnership with excellent service delivery. MapFre/Asistencia, a Spanish The current transformation process company which is one of the best is also reflected in the new vision of travel insurance providers in the the organisation which is: “to become world. The travel insurance is valid the insurance company of first choice for use in any of the shengen in Nigeria noted for high level countries and other European transparency, efficiency, capacity and countries. superlative customer service”. Niger Insurance Plc was initially Besides, the objective of Niger established as Yorkshire Insurance Insurance is to become the insurance Company Limited, a British owned company of first choice in Nigeria by insurance company in 1962 but it is 2012 through various programmes now a fully privatised composite such as strategic partnership with insurance company quoted on the stakeholders in the industry, floor of the Nigerian Stock re_engineering through human Exchange.
The Risk Shield
TREND Photo News
Pictures of the Wedding of Mr & Mrs Elias Mokwugwo held in Satelite Town, Lagos... recently
*Couple with staff of Crusader Life Insurance Limited. The Bride, Uche works with Crusader
*Cross section of guests with couple
*Mr & Mrs Elias Mokwugwo
*The Bride, Uche, during the Bridal Dance.
Standard Alliance Life MD Clocks 50
M
R Austin Enajemo-Isire, M a n a g i n g D i r e c t o r, Standard Alliance Life Assurance Company Limited is fifty. Austin holds Masters Degree of Business Administration in General Management from Delta State University and a fellow of the Institute of Chartered Accountants of Nigeria, Associate Chartered Institute of Taxation of Nigeria and Member, Chartered Insurance Institute of Nigeria.
He began his insurance career in defunct Globe Reinsurance PLC as a pioneer member of staff in 1987. Furthermore, he moved to STACO Insurance PLC as the pioneer Head of Finance and was later promoted to the position of Assistant General Manager before joining BAICO Insurance PLC where he actively participated in restructuring the company. He was a Deputy General Manager at BAICO from where he was appointed as Managing Director of Standard Alliance Life.
*Enajemo-Isire
15
TREND
African Insurers Slow to Implement IFRS
R
ISING from the recent African Insurance Organisation (AIO) seminar on International Financial Reporting Standards (IFRS), it was obvious that African Insurance operators may be left behind as operators are slow on it’s implementation. Though, there were much debates and apprehension regarding issues like the benefits and challenges involved in switching to IFRS at the seminar, it’s implementation would help African insurers to speak the same accounting language as their counterparts in other countries of the world. Already, over 100 countries around the globe have complied with IFRS model whilst some are working towards aligning with the standards by 2011. Mr George Onekhena Deputy Commissioner For Insurance, Finance and Administration believe that adoption of International Financial Reporting Standards by operators would offer important benefits to insurers, including the potential to simplify financial reporting and reduce accounting complexity and the costs associated with this function. Instead of preparing both Generally Accepted Accounting Principles (GAAP) and statutory financial reports, Onekhena said, insurers would ultimately comply with a single IFRS model, adding that IFRS also would enhance transparency for investors and shareholders. He affirmed that for African insurance sector to ensure readiness for IFRS adoption, insurers must begin to plan today for the business transition and IT infrastructure
18
*Onekhena requirements, evaluating their accounting systems and implementing new processes. “IFRS requires two years of comparatives, best practice and a running of comparative ledgers for five years. Nonetheless, the transition to IFRS presents insurers with a valuable opportunity to streamline reporting, expand visibility and reduce reporting costs.” According to him, “IFRS will likely contribute to substantial changes in insurance product design, price and offerings, investment strategy, risk management practices, securitization and merger and acquisition activity. Together, these changes will give rise to pressure for both convergence and divergence across insurance lines, thereby adding complexity and dynamism to the market structure of the insurance industry.” “Whether or not an insurance company concurs with the merits of IFRS, it behoves its management to consider carefully the potential implications of the widespread implementation of IFRS in the
*Soares industry. To compete, most effectively with a new reporting regime in place, insurance companies should begin to visualize and strategise for the journey upon which IFRS may guide the industry. By taking a proactive approach to understanding how the implementation of IFRS will impact key areas of the business.” Onekhena who delivered a paper on “Options for Optimising Cost in the Wake of Global Financial Crisis” admitted that there are inconsistency in the accounting for insurance contracts, particularly in the valuation of liabilities. “I believe that IFRS has come to stay and companies should start to prepare themselves. There are certain issues bordering on awareness at the board and management levels. The deadline is short and that is the more reason why companies should start early to look at what they need and how it is going to impact on their system on a broad basis so that they begin how to acquire the required skills to enable them snap into it.”
The Risk Shield