The Director-General, Chartered Insurance Institute of Nigeria, Mr. Richard Borokini, speaks with NIKE POPOOLA on the need for insurers to invest more in human capital development, among other issues
Why are issuers of fake insurance certificates still thriving in the country despite the efforts of regulators and professional groups?
They are thriving because enforcement is weak. Enforcement of compulsory insurance is weak generally; that is why it is possible for somebody to be walking about with a fake insurance certificate. If you want to import your goods, the law says that you should insure them with a registered insurance company. Instead of going to a registered insurance company to buy a genuine insurance, some people decide to go to buy a fake insurance policy from the port. If Customs officials will ensure that every importer carries a genuine insurance cover, then there won’t be any fake insurance policy. The same is with motor vehicles. Enforcement is also weak because at the place where these documents are issued, there is usually a racket, and definitely it is at the licensing offices where vehicle particulars are issued that some of the cabal operates, giving face insurance certificates. Rather than pursue genuine insurance, many desperate motorists go for a fake one. Again, the police and other enforcement agencies cannot differentiate between a fake and genuine insurance cover.
Have foreign investors made any significant contribution to the industry?
Every economy wants foreign direct investment but then, the FDI should come to the sectors that are required. The issue is whether we need foreign direct investment in insurance? Some years back, we did a recapitalisation. Although with the current devaluation of the naira, the capital base of many insurance companies has been depleted if you have to convert it to dollar terms. Therefore, there may be a need to actually call for more capital. If that capital is coming from abroad, why not? Probably, they will come in with better corporate governance. In terms of corporate governance, there may be some positive terms to it. Maybe in terms of product innovation, there could be an advantage. But for those ones that have come in, we have not really seen the impact. That is to show you that the Nigerian environment is a peculiar environment, and for you to operate there, you have to be able to understand the peculiarity of the environment. Largely, if you look at it, the first 10 insurance companies are still companies that are locally bred, but that is not to discourage foreign investors from coming in. The insurance penetration in Nigeria is low, and because the penetration is low, there is potential for anyone to come in. So, let them come in if they are able to bring innovation to increase insurance penetration. It will be good. However, in terms of whether those that have come have made any great impact, we are still watching.
What impact is recession having on the insurance industry?
Whatever is happening in the insurance industry is strictly tied to the economy. If there is positive development in the economy, it will affect the growth of insurance. Demand for insurance generally is tied to the purchasing power of the average Nigerian. So, if the purchasing power of the average Nigerian is affected by what is happening, definitely the ability to purchase insurance will also be affected. Therefore, the demand for insurance is tied to the well-being of the average Nigerian. And in this time of recession, people can hardly meet their basic needs. If they cannot meet their basic needs, then of course, it will affect insurance. However, it is the time of recession that people should even insure the more, because you need to protect your assets. As with the value of dollar to naira, it has depreciated drastically and what that means is that if it took you N1m to do a particular project a year ago, with the exchange and inflation rate that has gone up, it will probably take you about N3m to do it now. So, it is now imperative for you to protect that asset. And how do you protect the asset? You have to protect the asset by insuring it against risks that could occur like fire or flood. A time of recession is not a time for people to shy away from insurance; it is the time to insure, in particular, to insure assets that will be costlier to replace if anything happens to them.
What are the recent things the institute has been doing to develop the sector?
One of the first things that we have embarked upon is to engage in corporate visits to insurance institutions. The insurance institutions are our major constituencies and these are the insurance companies, brokers and loss adjusters. We have been meeting with them to solicit their support for the institute’s programmes and to have a feedback on how we can serve them better.
We have also been trying to let them know about what the institute has in store for them as partners in developing the insurance industry. We want to let them know the programmes that the institute has in place to deepen insurance penetration in Nigeria and for the development of our members. We also want to let them know the benefits of being members of the institute.
We have also started some programmes to help in the professional development of our members. One of them is the breakfast seminar that we have instituted.
We also want to let people know about creating awareness for the industry in general and we try to go as much as engaging government services in doing this.
What impact has the annual professional forum by the CIIN had on the sector?
The professional forum is the largest gathering of insurance professionals so far in Nigeria. It started about 25 years ago and has been growing in leaps and bounds. The essence is to bring professionals together to discuss issues that will enable them to perform better as professionals. The main reason for the forum is to discuss issues that will enable them to be better professionals; to equip them with relevant knowledge that will enable them to practise as insurance practitioners, and that usually informs the theme of the forum and the kind of speakers we bring on board.
What are the major contributions of the CIIN to the Insurance Act that is being reviewed?
The insurance decree is being reviewed and we are one of the major stakeholders that made input into the law. It is still a draft so I may not say much on it. Some of the inputs we made are for the betterment of the average professional in the industry and relates to the fact that if you are a professional, you must continue to develop yourself. It is not just being able to acquire the certificate, but you must continue to develop yourself and the new act will address that issue. You have to develop yourself to meet the reality of the present time.
Dangote Cement Refutes Claim it Sells Cement High in Nigeria
Dangote Cement Plc has refuted the widely propagated story that the company sells cement at a significantly higher price in Nigeria compared to other African nations like Zambia and Ghana.
The management of the leading manufacturing company said it sells a bag at N2,450 in Obajana and Gboko, and N2,510 in Ibese, the amounts stated include VAT.
Devakumar Edwin, Dangote’s Group Executive Director, Strategy, Portfolio Development & Capital Projects, who spoke with journalists in Lagos, said the company sells for an equivalent of $5.1, including VAT in Nigeria, it sells for $7.2 in Ghana and $5.95 in Zambia ex-factory, inclusive of all taxes.
Devakumar, therefore, described the allegation as false, misleading, and unfounded, and challenged the media to conduct independent investigation into the price of cement in some other African countries, including Cameroun, Ghana, Sierra Leone, Zambia.
“To ensure that we meet local demand, we had to suspend exports from our recently commissioned export terminals, thereby foregoing dollar earnings.
“We also had to reactivate our 4.5m ton capacity Gboko Plant which was closed 4 years ago and run it at a higher cost all in a bid to guarantee that we meet demand and keep the price of Cement within control in the country.”
“Over the past 15 months, our production costs have gone up significantly. About 50% of our costs are linked to USD so the cost of critical components like: gas, gypsum, bags, and spare parts; has increased significantly due to devaluation of the Naira and VAT increase.
“Despite this, DCP has not increased ex-factory prices since December 2019 till date while prices of most other building materials have gone up significantly.
“We have only adjusted our transport rates to account for higher costs of diesel, spare parts, tyres, and truck replacement. Still, we charge our customers only N300 – 350 per bag for deliveries within a 1,200km radius.
“We have been responsible enough not to even attempt to cash in on the recent rise in demand to increase prices so far,” Devakumar said.
Samsung, Vision Care Begin Fresh CSR Activities, Earmark 12,000 Masks for Nigeria
Samsung Heavy Industries Nigeria Limited (SHIN) and Vision Care, an international relief organization dedicated to the prevention of blindness, have launched fresh Corporate Social Responsibility (CSR) initiative to help Nigeria mitigate the impact of COVID-19 pandemic.
Vision Care is a member of the International Agency for the Prevention of Blindness (IAPB), and participant of ‘VISION 2020’, a global initiative of the IAPB and the World Health Organisation (WHO).
Vision Care has since conducted more than 25 Vision Eye Camps yearly and has grown into an international non-profit organisation serving 38 countries throughout Asia, Africa and Central-South America.
Since 2015, SHIN has worked with Vision Care in the yearly Eye Camp as part of its Corporate Social Responsibility (CSR) to provide free cataract surgeries to Nigerians who cannot afford the payment. SHIN has been sponsoring the eye surgeries of Nigerians on a yearly basis.
In 2019, SHIN sponsored the eye surgeries of at least 115 Nigerian patients and 224 outward patients as part of its CSR in Nigeria.
Since it started the programme, SHIN has sponsored the eye surgeries of 572 Nigerian patients, 1,593 outward patients and has also donated glasses to 99 patients.
Due to outbreak of the COVID-19 Pandemic, the yearly Eye Camp for 2021 had been called off to adhere to Federal Government’s measures in response to the virus.
Consequently, SHIN and Vision Care came up with a fresh CSR initiative this year to donate 496 bags of rice (25kg) and 12,000 reusable face masks to three states in the country to fulfill their commitment of contributing to the society.
The items will be delivered later this month.
The three states that will benefit from the donation are Lagos, Kano and Bayelsa states.
Out of the 496 bags of rice, and 12,000 facemasks, Lagos will receive 96 bags of rice and 200 masks.
SHIN also stated that Kano State will receive 200 bags of rice and 5,000 masks, while Bayelsa State will get 200 bags and 5,000 masks.
“This is an additional CSR activity from SHI in addition to SHIN’s donation of 5,000 COVID-19 test kits from Korea. The washable masks that the head office has purchased from Korea are certified to retain its effectiveness against COVID-19 transmission for up to 50 washes,” SHIN said in a statement.
Senate Summons NICON, AIICO, Others Over N17.4bn Pension Remittances
The Senate Public Accounts Committee has summoned the management of the NICON Insurance Plc, AIICO Insurance and other insurance companies over their alleged failure to remit N17.4bn pension fund to the Pension Transitional Arrangement Directorate.
The Senate hinged the summon on the 2016 report of the Auditor-General for the Federation which unraveled the alleged non-remittance of N17.4bn pension fund to PTAD.
Appearing before the panel on Monday, the Executive Secretary of PTAD, Dr Chioma Ejikeme, informed the lawmakers that PTAD took over the assets and liabilities of the defunct pension offices without a formal handing over.
She said, “On taking over, the directorate wrote all underwriters to make returns and remit whatever amount that was in their custody into a CBN dedicated account.
“Some of the underwriters responded to the request while some did not.
“The bank certificate of balances, accounting statements, three years financial statements and policy files requested by the federal auditor were not handed over to PTAD at the time of consolidation.
“It is worthy to note that we discovered that N17.4bn which comprised of cash, securities and properties from the nine insurance underwriters was unremitted as a result of the letter PTAD sent to them.
“These figures represent the claims by the underwriters with regards to their indebtedness.
“In order to ascertain the true position of legacy funds in custody of underwriters, the directorate appointed a consultant in 2018 who carried out forensic audit of nine out the 12 insurance underwriters and produced a final report on the recovery of the legacy funds and assets for PTAD.”
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