By Ekerete Ola Gam-Ikon
It all started like the normal disappointments associated with pyramid schemes as one person (investor) after another complained of not receiving his/her payment (return), then it became obvious to all investors that the scheme had ceased to produce returns.
A quick check revealed that, on the flier advertising the scheme both online and offline, it was boldly marked “In Partnership With XYZ Insurance”, so the investors’ hopes were reasonably protected. It was when the insurers announced and clarified that the insurance contracts were for the farms, their assets and products that the investors were sure that disappointments had visited them. Unbelievable but true!
The investors screamed “My investment was not insured?” They protested and threatened then gradually came round to accept that right at the beginning they were on their own, having failed to clarity at any point what they assumed to be true.
Ordinarily, for any investment one is making, due diligence is advised but the investors who have painfully lost money as farmers and agribusiness owners increasingly relied on the emergent crowdfunding platforms within the last couple of years, seem not to have checked and asked questions sufficiently. Or were they carried away by the high interest (sometimes up to 40 percent) advertised by the scheme?
Speaking at a webinar last month, I clarified that insurance, by principle, does not cover speculative risks (where gain or loss exist) but only covers pure risks (where only loss exist), so those investments were not covered. The participants, most of who had invested in such platforms and lost money, were simply devastated and would wish they heard something different.
Apparently, some of them were hoping to hear that the insurance companies in partnership with the projects would be available to compensate them by way of claims payment.
It is indeed interesting that people with apathy to insurance would now expect insurance to be there for them.
Staying informed about the instruments and vehicles of investment is part of the basic tools an investor is required to have as it is as well when it comes to insurance.
In this season of recapitalisation for insurance companies induced by the regulator, National Insurance Commission (NAICOM), investors are equally challenged having had their funds held down in specified instruments while awaiting the final determination of the process, by September 2021.
Only recently, the House of Representatives advised NAICOM to shift the first recapitalization deadline scheduled for December 31, 2020 by six months, and expectedly some investors have began to express concerns about the safety of their funds, guarantee of returns on investment and fulfilment of their desire to play in the insurance sector.
Stakeholders are waiting to see how NAICOM responds especially as the Public Hearing on the Insurance Bill 2020, which has passed Second Reading, comes up on Monday and Tuesday December 14 and 15.
Some analysts are hopeful that the passage of the Bill for assent will make the deadline irrelevant and give respite to the operators that were not in a position to meet the deadline.
Notwithstanding the outcomes, investors in the insurance sector and related offerings desire early assurances that would ultimately promote the value of insurance in the recovery and sustainable development of our national economy.
The leadership of the insurance industry in Nigeria is conscious of the concerns of stakeholders and taking steps to engage and clarify the information and data regarding insurance.
Nigerians are increasingly encouraged to ask questions and get information necessary for a better insurance experience.