- Wants NAICOM to withdraw 2-3 licences of insolvent insurers
The imminent entry into the Nigerian insurance market by two bank connected entities, Heirs Holdings, the group founded by Tony Elumelu, the chairman of United Bank for Africa Plc, and StanbicIBTC Bank, has been welcomed by an insurance, strategy and management consultant and analyst, Ekerete Olawoye Gam-Ikon, who believes that their entry will bring good to the industry.
“These new companies are coming from environments where governance is a big issue and having succeeded there, they cannot afford to fail in the insurance sector and in Nigeria,” Gam-Ikon said in response to questions from Business A.M. about the new development in the Nigerian insurance market was announced.
He said the industry must be happy to have them come in because, as he said, “Nigerians deserve better insurance experience!”
Tony Elumelu’s Heirs Holdings has applied to insurance industry regulator, the National Insurance Commission (NAICOM) to register two companies, a life and a general business companies respectively, while StanbicIBTC applied to register a general insurer. Along with Ghana’s leading private insurer, Enterprise Group, which also applied to register a life insurance business in Nigeria, NAICOM put out a notice at the weekend to inform the general public about its pending consideration of their applications.
But Gam-Ikon is particular about the pedigrees of the new applicants seeking to play in the Nigerian insurance market, especially coming from the banking sector, which he believes they would leverage on to provide the kind of service that Nigerians have long yearned for and deserved.
“The coming of these companies, mostly affiliated to banks, mean that they will solicit patronage from the bank’s customers or create products that they will buy, thereby increasing the insurance density marginally. Remember, bancassurance has not really gained traction despite the push of the financial inclusion strategy; this is because people would not buy insurance except they are forced. Insurance companies in Nigeria are just beginning to focus on customers, thanks to digital solutions and this is the area we hope the entry of these companies will make some differences,” he said.
But he also believes that the regulators have a lot of work to do in putting the insurance industry on proper footing, challenging them to ensure regulatory and supervisory environment is right, adding “This is the time to make strong statements about risk-based supervision and making the portal work so compliance can be enhanced. These new companies are coming from environments where governance is a big issue and having succeeded there, they cannot afford to fail in the insurance sector and in Nigeria,” Gam-Ikon said.
He said the regulatory environment was important for the success or failure of the industry. He believes that as things are now the regulatory environment is falling short.
For instance, he said there were six insurance companies currently under the management of NAICOM, the regulator, and that these companies are insolvent and have violated all insurance laws especially the inability to meet their obligations to policyholders, employees and regulators, thus giving the industry a bad image with one of them becoming “notorious for unpaid claims and nothing has been done by the regulator.”
He called on NAICOM to withdraw two or three licences of this group of violators as the new ones come on board, to create an atmosphere of trust by policyholders.
“In my view, the licences of 2-3 of these companies should be withdrawn by NAICOM as the new ones come on board, to seek to create an atmosphere that policyholders can trust,” Gam-Ikon said.
Ekerete Gam-Ikon, who is a Business A.M. columnist is a strong advocate for insurance in Nigeria and seeks an industry where the practice will focus on the policyholders with a view to having an ordered and well regulated industry.
The four new insurers that NAICOM is considering for registration are Heirs Insurance Limited, which was incorporated in February 2015, and is seeking to operate in the general insurance category; Stanbic IBTC Insurance Limited, which was incorporated with the CAC in May 2012 to perform insurance business in the country; Heirs Life Assurance Limited, incorporated in February 2019; and Enterprise Life Assurance Company Nigeria Limited, incorporated in October 2019.