Insurance industry is a big time business in Nigeria
today controlling a sizeable chunk of the nation’s resources. Record has it
that the gross premium income of this industry has grown to N285B. Over the years the industry has
evolved no thanks to the several legislation and government interventions all
of which have led to the stupendous growth for the industry. Unfortunately the
industry is still being challenged by public apathy and / or nepotism which
have resulted in low market penetration. According to statistics, “the industry
presently is still struggling with accounts adjustment to the globally accepted
international financial reporting Standard (IFRS). This situation has
drastically affected the speed at which operators used to declare results in
the past”. Again facts indicate that currently about 25 operators out of over
40 companies have had their financial accounts totaling N186.38 gross premium
income written for 2013 approved.
Notwithstanding this remarkable feat, the industry
is bedeviled by a lot of ills which I classify under three headings as
hypocrisy, family hold and greed. These are some of the identified ills
threatening the industry and will continue to impede it for as long as they
remain there, unlike its counterpart in other countries where strict compliance
to rules of engagement is strictly enforced.
The practitioners capitalize on every little
loophole in the system to their advantage as most of them have remained there
for long thereby becoming a tin god within their entities. Operationally, most
of the practitioners have promoted mediocrity and brazen illegality by
circumventing the ethics of the business, tempering a great deal with their
company records. Some of these chief executives are more of a liability to
their companies; owing mansions in every high brow areas of Lagos State, Abuja and
abroad. They also engage in frequent & unnecessary overseas trips to run
their businesses and squander the company resources.
Their boards of directors which are
supposed to initiate policies and ensure that the company is run accordingly
are just there and watch these powerful colossus dip hands at will in the
income of the business to satisfy their insatiable taste. Some of these
practitioners will bore you with stories of how they worked the streets of
Lagos in order to find investors to set up this business.
The truth is that the regulators have not done much
to check some of the excesses of these chief executives. The system having
spelt out the rules (in accordance with the laws of the land) and ensuring
strict compliance have left the industry in the hands of charlatans and greedy
people whose only aim is to fill their pockets. The regulators for instance,
should among other things spell out the tenure of chief executive as it’s done
in the banking sector. But what do we have in the insurance industry? Some
chief executives have been there for ‘donkey years’ and hardly contribute
anything new to the insurance industry. Some of them have been around for over
20 years and still pride themselves. They have nothing again to contribute
other than scheming how to ensure that their children take over from them.
The National Insurance Commission (NAICOM) has done
a lot recently to sanitize the industry but obviously that is not enough.
Indeed they are more of a toothless bull dog seen only on paper than in action.
The consolidation exercise carried out in the industry some years back
succeeded in shrinking the number of operators at the time but failed to remove
the issue of family grip on some of the firms in the insurance business.
The exercise was also supposed to instill some
fiscal discipline in the finances of the companies. But what do we have
presently? The family hold continues to be unbeatable and some other ills
prevalent in the industry. Some of these operators have even gone a step
further to install puppets as Managing Directors/CEOs of their companies
pending when they will be able to manipulate events further to put a relative
in charge.
I still know of an insurance company where the whole
family members are on the board and every sundry issue in their homes are taken
care of by the company.
Time will not permit me to continue with this
exposition, obviously the insurance industry is seriously being plagued in
Nigeria. No wonder they find it difficult to grow capacity and move beyond
their present level of underwritten business and accountability. The regulators
will do well by living up to their billing and expectation. First is to do a
complete audit of insurance companies/operators. This exercise, if properly
handled, will reveal a lot of leakages which have continued to retard growth
and severely drain the much needed resources for the industry.
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