The 2020 renewal season is taking place quietly, with most companies trying to retain their clients, but what is not being taken for granted by clients is wanting to know how the underwriters approaching them will remain in business post recapitalisation.
So, companies that are marketing themselves for business in the new year have with them readymade answers for questions that they may expect from clients including recapitalisation, giving assurance on what they are doing to remain in business at the end of the exercise.
The tension however became reduced when the National Insurance Commission (NAICOM) announced extension of deadline which moved from 30th June 2020 to 31December 2020.
Insurance companies at the beginning of a new business year embark on policy renewals for their clients to cover the current year.
Renewal, in the context of insurance, refers the continuation of coverage. The policyholder extends their contract with the insurance company to continue their current coverage for a specified period. The insurance company typically invites the policyholder to renew the policy near the end its term.
The National Insurance Commission (NAICOM) had in a circular issued on Monday May 20, 2019 announced increase in the paid-up share capital of life companies from N2 billion to N8 billion; General Business from N3 billion to N10 billion; Composite Business from N5 billion to N18 billion; and Reinsurance companies from N10 billion to N20 billion.
According to the Commission, the minimum paid-up share capital requirement shall take effect from the commencement date of the circular (May 20, 2019) for new applications, while existing insurance and reinsurance companies shall be required to fully comply not later than 30th June 2020, before the recent extension in date to December 31 2020.
Currently, insurance companies are engaging their clients and broker partners for the 20120 renewal, with different value propositions for retention and signing of new businesses.
Underwriting companies are busy now lobbing brokers on new accounts and renewal of existing business, and also signing of reinsurance treaties with major reinsurance companies locally and internationally.
But the unfortunate thing is that the rate war that has eaten deep in the industry over time is yet to be over, and analysts fear it may impact negatively on the industry growth since claims have been on the rise in recent times.
Chief Executive Officer of one the life insurance companies said “Renewal is going on but the biggest challenge we have is rate war. Our people are killing the business, accepting anything they see while claims are rising.”
Another CEO also said “We have not had a serious problem with our renewals. But where broker’s brought rates that are not within our acceptable limit, we have asked them to take it back to their clients for increase or we turn our back”.
The CEO further stated that, pricing is a big challenge for the market, but we must define our direction.
