|
Getting your Trinity Audio player ready...
|
Nigeria’s insurance market is poised for a price war as firms look to shore up their market share ahead of next year.
Currently, insurance companies are engaging their clients and broker partners for 2018 renewals, with different value propositions for retention and signing new businesses, BusinessDay has found.
Industry stakeholders are concerned the rate war may impact negatively on the sectors growth, since claims have been on the rise in recent times.
The Chief Executive Officer of one life insurance Company said: “Renewal is going on but the biggest challenge we have is the rate war. A lot of firms are accepting anything they see even as claims are rising.”
Beginning from October/November each year, insurance companies across the globe begin firming up their position in readiness for the new businesses year.
Around this time, business acquisition plans for 2018 have usually begun, with underwriting companies lobbing brokers on new accounts and renewal of existing business. This is also the time for signing of reinsurance treaties with major reinsurance companies locally and internationally.
The Nigerian insurance industry in the 2016 financial year recorded an estimated gross premium income of N380 billion, a 22.2 percent increase from N311 billion recorded at the end of the financial year in 2015, according to the Nigerian Insurers Association.
The industry paid an estimated 28 percent of the total premium amounting to N98 billion on claims during the same period.
“What we have done is to ensure we retain our old customers and try to get new ones because we realise the difficulty in the economy, and if certain considerations are not given to clients they don’t mind dropping some of their covers,” said Jide Orimolade, managing director/CEO, Law Union & Rock Insurance Plc.
“Part of our corporate objective is to create a niche for ourselves in the industry. We are not unmindful of the competition which is characterised with price war in the industry, but we believe we could navigate through by differentiation and best service delivery,” Orimolade said.
Another Insurance 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 to them to take it back to their clients for increase or we turn our back.”
The CEO further told BusinessDay that pricing is a big challenge for the market, but the industry must define its direction.
According to him, while we will not compromise on pricing, we allow for bit by bit payment, in line with regulator National Insurance Commission NAICOM’s ‘no premium no Cover policy.’
With insurance brokers controlling over 70 percent of the market share, they have largely become players that must be courted by underwriting firms who seek to increase their premium income as well as return on investment for shareholders in the coming year.
Gbenga Olawoyin, managing director/CEO, Prorisk Insurance Brokers Limited had said “Yes, this is the time underwriters try to engage us and resolve issues ahead renewal.”
He said “The meetings take time because we also need to put our own house in order before we meet our clients any moment from now.”
“So, the underwriters try to resolve service issues during these meetings ahead our placement decisions in December,” Olawoyin noted.
Leke Dapo, another broker said “For me service delivery is not a fire brigade approach. If there are issues, underwriters should not wait till renewal period before they come to resolve them, so we take cognisance of those things in making our decisions. But I can tell you, we are strengthening relationships for 2018.”
MODESTUS ANAESORONYE
