In this interview with NIKE POPOOLA, the Managing Director, Consolidated Hallmark Insurance Plc, Mr. Eddie Efekoha, who is also the Chairman of the Nigerian Insurers Association, speaks on prospects of the underwriting industry
How will the enforcement of compulsory insurance impact the insurance market?
We have had compulsory insurances in our Act, but these compulsory insurances are as good as no insurance because they have not been enforced. The ones that were taken away from us; workmen compensation and pension, have made so much headlines because enforcement had supported them.
Now, the government and regulator are beginning to work on how to enforce a lot of these products. If this would take place, it is certainly a game changer. If everybody carries a fire policy, you know what that means. Just like if everybody buys insurance for their motor genuinely, third party only, considering the number of vehicles, you can see. The market is set for greatness.
What should be expected from the capital verification of insurance companies?
Capital verification is one of the priorities which the regulator has put in place for this year. I do not believe that we should be talking of raising more capital when all of us who are in the business do not seemingly have the same capital. First of all, let us be sure all of us have attained that minimum capital – N5bn, N3bn and N2bn or N10bn as the case may be.
When that has been done, we can talk about the risk based capital. The risk based capital is not something that will come overnight. We are all waiting and expectant. We believe that at the end of the day, it will come and it will help us to grow. For Consolidated Hallmark, we are more than compliant as far as the N3bn category is concerned. If you check out books, we are far in excess of the N3bn we are required to have
How prepared are you for risk based supervision?
When it comes to risk based capital, it depends now on the methodology that will be adopted; whether the methodology of solvency II model or some other methods. Even South Africa is operating a method different from what the United Kingdom is employing.
So, at the end of the day, whatever method that is operated, we will look at it. I believe that we should be able to meet it. As you will see very soon, when we release notice on our annual general meeting, you will notice we are about commencing a capital raise.
That is just to shore up and prepare us for the opportunities that will arise in the market. We are ready, and it is good that out regulator is thinking of verifying capital because that is the beginning, and then we build on it by the risk based capital and we see how we will take opportunities from that.
How did Consolidated Hallmark meet the last recapitalisation exercise in the industry 10 years ago?
Ten years ago, some developments took place in the insurance industry. Principally, we know of the recapitalisation that was induced by government through the National Insurance Commission. It spanned over a period of eighteen months and ended February 8, 2007.
While some people saw it as an opportunity, others saw it as a challenge. For us, we saw it as an opportunity to increase in size. So, rather than go into it alone; we decided to go as a team in other to build capacity. So, our way of responding to the recapitalisation was to go through a merger.
It was a merger of three companies. They were Consolidated Risk Insurance Plc, Hallmark Assurance and Nigerian General Insurance Company. Fortunately, we did that and NAICOM issued us a license. So, by March 1, 2007, we opened business in the name of Consolidated Hallmark Insurance, taking advantage of our brand combination and this reflected in the choice of our name today.
That was how we came about the company we are operating today. We are celebrating 10 years of existence from the time of the merger, not when the merging entities came into the business of insurance. There were many stakeholders in the merger and the first to be given kudos are the investors that went through the court ordered meetings that gave birth to this merger.
All of us can vividly remember what happened then, when we all had to face the wall of NAICOM office in Abuja like students waiting for the result of an exam. Until your name was called, you were not sure you had scaled through.
After a successfully recapitalisation, what means did you put in place to build the new brand?
As soon as we concluded the process of getting our license from NAICOM, we came back happy and the process of integration started. In integrating, we looked at key functional areas of the business.
The issue of staffing was critical because we ensured that we didn’t lose our best hands. We were also mindful that we needed to ensure we raised our standard and had a minimum benchmark.
We had committee empowered by the board and they went round all the company locations, conducted fresh interviews and as soon as you crossed the minimum benchmark, found fit and proper and age was on your side, you had a space.
So, when that was concluded, we issued ourselves fresh letters of appointment. That is why as we celebrate 10 this year, many of our staff who were part of us at the beginning have clocked 10 years working with us. We also worked on the technical side of the business and integrated all the operations and processes. We thank God we are where we are today.
Ten years after recapitalisation, some firms have gone down. How have you been able to cope with changing economic challenges?
We cannot say it is by our power. Attaining 10 years is by God’s grace. They said the race is not for the swift. So we cannot say that we are strong to have survived the past years or everything was just by our own power. I think God got us to where we are.
It is unfortunate if any company fizzled out within this past 10 years. I would not say maybe they did not pray hard enough, but for us we prayed and also worked very hard. This is a service business. So it is largely premised on people and if you don’t have the right people you are not going to be able to make it.
So, as soon as we concluded the merger, we had a retreat where we agreed our core values and also agreed to change our logo and all that stuff.
By the time we agreed on core values, we saw that the core values of professionalism, relationship, integrity, customer focus, excellence are people determined not machines. It is only people that can drive them, and so we came up with this offline “We are what we have.”
We focused on people and have continued to build on our strength and capacity. We tried to select rightly and that is not to say we did not make mistakes.
We also emphasised on technology, which are needed to help our people deliver. People alone cannot deliver and so we emphasised technology. You remember we are the pioneer promoter of online third-party policy and, the acting commissioner for insurance at that time was on ground to flag it off, and we went all round town. Bye and large, the product got matured and we went on.
In between, we realised that if we must survive, we needed to pay attention to the key stakeholders that made this merger possible. How do we respond to them? By paying dividends! We did not pay dividend all the years, but we paid dividend most of the years we existed after the merger.
It will interest you to know that a company that was capitalised a little over N3bn has paid to date about N960m dividend and by the time this year’s own is added, we would have crossed N1bn mark. This has helped us to move from our year zero to year 10.
The principal thing in our business is the payment of claims. So, we made sure that in these ten years we have paid claims the way it is supposed to be paid, against the perception out there about insurance. So, each year when we go out to say happy New Year to our clients and brokers, we are encouraged about the comments they pass on us on our claims paying practice.
So, we are getting our own share of the market. It could be better but we are grateful to God. And we have enjoyed the cooperation of our board, being that they gave us freehand to operate and there is absolute trust between board and management and this has taken us to where we are today.
What impact has recession made on the insurance industry?
Recession is a matter of a very short time. Recently, the World Bank said Nigeria was out of recession and the presidency said they are conscious of it and they are waiting for the figures from the Bureau of Statistics. Truly, you will feel it.
Yes, we are beginning to feel it. When we were in recession, we felt it. Now that we are getting out, we are also feeling it. If the Federal Government can fund the foreign exchange demand the way they have done and have been doing it, we would not have got to this level.
For them to have funded it and still grow reserve is a pointer to the fact that we are out of it. And when you look at it sector by sector, you find out the financial services did not really go down like that. Oil and gas ran into hitches, no thanks to restiveness and insecurity by the boys.
However, a few visits initiated by the presidency and anchored by the vice president and talking to the leaders and the boys have brought the whole situation under control. Just a word of reassurance, we value you; we are part of you and all that. We no longer hear bombing of pipelines and all that.
Every individual is important, even in our companies. Recession yes! It takes time for values to go up; it will also take time for it to come down. There have been job losses here and there, but the ingenuity in us has also helped us to remain growing and insurance has really found relevance in the current situation.
The current situation has taught people on the need to save and that has further re-echoed the need for insurance. While it lasted, it impacted the business, no doubt. The capacity of most of us to buy insurance was limited. Some factories closed down and all of these impacted on the business.
Going forward, what are the prospects of the insurance sector?
The indices are clear. If you look around, you will see that a lot of our friends from outside Nigeria are looking at Nigeria and if they are doing so, then you don’t need any one to tell you that there is something good about us or a potential they are seeing. It then means that those of us here should equally watch out.
You have seen that the Minister of Finance recently engaged the market and has continued to engage the market to unlock its potential. This has been further strengthened with recent developments in NAICOM and all of these are to help harness the potential of the industry.
Unlike before, government is beginning to understand that in its bid to grow the economy, to get out of recession insurance cannot be handled the way it had been. For us as operators, we should roll up our sleeves and see how we can take advantage of the opportunities in our industry.
