January 28, 2016/Punch
The cost of procuring insurance cover for vehicles and corporate businesses will soon be reviewed upward by the Federal Government and operators in the underwriting business to make up for inflation and the lingering economic challenges in the country, investigation has revealed.
Some of the underwriters, who disclosed this exclusively to our correspondent, said that the Minister of Finance, Mrs. Kemi Adeosun, would next week inaugurate a committee to review the consolidated rates at which insurance covers were being done in the country.
The rates for major mandatory covers such as motor insurance and other corporate insurance policies would be reviewed upward, it was gathered. The committee would also review all the insurance rates in the country’s statutory laws.
Underwriters, who revealed this to our correspondent, said investors were showing interest in Nigeria’s insurance industry but were worried that many of the underwriters were doing business at inappropriate rates, because most of the rates in the industry were outdated and not profitable considering the depression in the country’s economy.
According to them, it is imperative to raise the rates and introduce new ones where appropriate.
It was learnt that the committee would review the rates for all insurance business in the country to enable the sector to adjust to the current economic realities and make profit.
The current rates at which policies are being underwritten were fixed more than a decade ago when the Insurance Act was enacted.
Earlier last year, the Nigerian Insurers Association had decried the low rate at which motor insurance was being done in the country.
During a retreat by the Motor Technical Committee of the NIA, the body had complained about the effect of inflation and inappropriate pricing on motor insurance.
The NIA committee considered the review of the rates on motor policies and the improvement on some motor underwriting clauses like depreciation and excess.
The Director-General, NIA, Mr. Sunday Thomas, said the issue of rating had continued to engage the attention of members of the governing council of the association, adding that the NIA considered a committee to review the rates on motor insurance business.
The President, Nigerian Council of Registered Insurance Brokers, Mr. Kayode Okunoren, said the insurance sector could not be immune from the economic challenges in the country.
“We are hoping that the moves that the Federal Government is making to improve the economy will be a positive thing for the industry,” he said.
Okunoren said the insurance brokers would be doing business the way they ought to, adding that when things were tight, they must devise another way of moving forward.