President, Nigerian Council of Registered Insurance Brokers, Mr Rotimi Edu, speaks with NIKE POPOOLA on developments in the insurance industry
Insurance operators are working with Lagos to ensure compliance with building-related insurance laws. How is this going to help to reduce incidences of building collapse in the state?
Building collapse has not just started. There are old houses that are collapsing, there are new ones recently built that are also collapsing due to failure, either of piling, test or whatever. What is most important is that all hands should be on deck to try and stop building collapses. This is why Lagos State Government does a thorough inspection and ensures valuation of the property before providing the certificate of occupancy or the authority to construct. The area of interest is that they are partnering with Lagos State Government, and the Lagos State Building Control Agency often visits to ensure everyone has insurance in place.
Once you start building, they just immediately ask you to get insurance. That is even if your foundation and other requirements are met.
The insurance sector grew by 15.68 per cent in the first quarter of 2022, according to figures from the National Bureau of Statistics. What are the factors responsible for this growth?
Like I said, awareness is first and foremost. And then, at periods of economic regression, sometimes people look for how to protect their assets. One of the foremost ways of protecting the assets of a company or an individual is to ensure that those assets are insured to meet up with economic losses that could have occurred if they were destroyed. So, for me, that growth area becomes visible. Then another area of growth is that with the intervention of the regulator, the National Insurance Commission, a lot of government agencies too are responding to insurance. I am sure that if the compulsory insurance aspects are well taken care of, at the end of the day, we will have a very good growth.
The Nigerian Content Development and Monitoring Board and NAICOM recently launched the guidelines to achieve 70 per cent local content in the sector. How will this help to retain more risks and premium in the country?
This is one fact that will still be ongoing because if you recall, insurance companies have been asked to recapitalise. But that has been shifted and shifted because, not only do they not want it, but it became so political due to the amount involved. The insurance industry is begging for more time now. And asking for more time is just to raise enough money. But I think the capitalisation comes first. Then, if at the end of the day the local content is put in place, that means that the market will have a higher retention to hold, to save capital flight and to also save the economic gains of retaining a higher percentage.
Recently, the NCRIB urged the British Insurance Brokers Association to give some priority to issues relating to insurance in Africa to give some sense of belonging to delegates from the region. How will this benefit Nigerian insurance brokers?
The BIBA represents the largest insurance gathering all over the world. Britain also hosts the largest insurance broking facility for the whole world. Thirdly, BIBA also represents the dynamics in insurance in terms of practice, in terms of new products, information, and even in terms of regulation that makes insurance work. So, linking up with BIBA cannot be over- emphasised. When we visited, we were able to lay before BIBA the issue of public insurance and they were ready to share their experiences with us.
What are the expected benefits of the African Continental Free trade Agreement for the Nigerian insurance industry when it fully commences?
A lot abounds for the Nigerian insurance industry. For instance, we might say insurance is undersold in Nigeria, but at the same time, those claiming that they have more insurance penetration, if you look at the population and compare it with that of Nigeria, you will agree that Nigeria is a force to be reckoned with when it comes to insurance. Some of our neighbouring countries that go into specialist areas also depend on us to be able to either underwrite or facilitate reinsurance programmes for them. But the main reason why AfCFTA is so important is that, I believe that the first step is always the best step sometimes. Let’s take the step and see how well we can go with this collaboration, regionally or in the African context. I know regionally we are trying to have a single currency for the purpose of trade. If you have that, then all other components that are existing in the financial markets should also take steps to be involved. For insurance, it will open a lot of income for the country, the people will be able to transact their insurance business too.
Apart from that, the AfCFTA itself is an economic wheel for the whole of Africa and Nigeria cannot isolate from it. So, I see it as a blessing; I see it as something that if we can get it right, Nigeria will become a hub for so many economic activities that will demand for insurance.
Is forex scarcity challenge also affecting the insurance sector, and what is the way out of this challenge?
Yes, definitely. It is, undersold because forex is an economic driver in the area of industrialisation, in the area of trade, in the area of international trade, even in our local exchanges. The point that I have tried to make is that until Nigeria goes into its production, until we can make do with our own production, ensure our own locally fabricated goods, we will be spending forex for importation. Sometimes we import things that are not necessary, and that really affects the exchange rates for this country. Also, in the world presently, there is a lot of issues because of the oil and other necessary things that are being imported here and there. The oil and gas issues are there. The war in Ukraine is also another battle that is pushing up the dollar because a lot of money is being pumped daily into the war and the dollar has been the exchange rates.
As much as CBN tries to mitigate against these forex challenges, CBN needs to do more because from my understanding, there are levels of allocation being done there that do not support the economy, but are rather based on who you know. Some people get dollars at lower rates, some get at higher rates. People who are ready to use the dollar for economic purposes are not being given as much as those who are using it. So, all these pressures have brought about unnecessary increase in the exchange rate. My own suggestion is that we have to finetune our economic policy to go into production, rather than importation, finetune our economic policies to take away capital flight from the country. The educational sector is not also healthy because it is not stable. Look at the issue of locking up universities for months. No set of parents will want their children to suffer in their educational pursuit. They will rather take their children abroad to go and study because they know that within four years, they will have finished and be able to contribute to their family growth. But in Nigeria, institutions are locked for almost two years. A four-year course takes six years, if not more, and it does not guarantee that the child will be at par with their counterparts in the world. We need to restructure things so that we can forget this dollar syndrome that we all have.
With the rate of insecurity in the country, can insurance industry still give major protection on special covers in the country?
Insurance has a role to play. We have the kidnap and ransom insurance cover, but that it is not a cover that any underwriter will love to openly advertise or any broker will love to say they are doing because of the sensitivity surrounding it. It is a policy, but as good as it is, it can’t be popular in the eyes of society. It can only be done in a way to protect the employers if it is a policy that is taken by the company, or even to protect the individuals. I believe that kidnap and ransom policy is good, but care has to be put into it.
The NCRIB organised an insurance walk. What did you intend to achieve with this?
One of the aims of the walk is to give us that strength to exercise our bodies. We walked a total of 6.4 kilometres, which is one of the achievements of the exercise. It is for healthy bodies that we are looking for. The number two is that we used it to deepen insurance. We feel that we have to take insurance to another level because we should advertise ourselves as brokers, the services that we render, and the need for us to be known as a very vital part of insurance business in Nigeria. As under-insured as we are in this country, a lot of people that are insured also still do not recognise the role of an insurance broker, which is very complementary to whatever they are doing. We organised the exercise to be able to distribute pamphlets. Our members were able to distribute their various pamphlets to the would-be buyers of insurance. It is also an avenue for us to get awareness to the general public.
The NCRIB has been visiting governments and different organisations to embrace insurance. Have you been getting insurance support from these visits?
We have been able to get support. We do all these to open opportunities for the members. Our first engagement was with the Nigerian Institute of Architects. We decided to do that based on the research experiences that they are having in the area of the built environment – building collapse. When we spoke to them, they were very happy. We were able to educate their members such that we are also planning with them to host their national events. We have been to those areas, informing them of the need to insure their lives through registered insurance brokers. Like I told our members, the bottomline should soon be affecting each and every one of us in terms of response from this awareness creation.
