Mr. Richard Borokini is the Director-General, Chartered Insurance Institute of Nigeria. In this interview with ABIOLA ODUTOLA, he opines that in spite of the current economic recession, Nigerians should not shy away from exploring the various opportunities available in the insurance sector, saying that the enforcement of compulsory insurance in the country is weak. Excerpts:
How would you assess the enforcement of compulsory insurance in Nigeria?
geria? It is generally weak in Nigeria. That is why it is possible for somebody to be going about with a fake insurance policy certificate. Instead of going to a registered insurance company to buy genuine insurance policies, some people decide to go and buy fake insurance policies from the port. If Customs officials would ensure that every importer carries a genuine insurance cover, then there won’t be any fake insurance policy.
The same is with motor vehicles particulars. Enforcement is also weak, because at the place where these documents are issued, there is always a racket, and definitely it is at the licensing offices where vehicle particulars are issued that some of the cabals operate, giving fake insurance certificates.
If Customs officials would ensure that every importer carries a genuine insurance cover, then there won’t be any fake insurance policy
How could it be tackled?
It is through technology. The insurance industry is going the way of technology to check that. For example, if you have to purchase your insurance, and your certificate is on a portal, if a law enforcement agency is asking somebody on the road for his insurance, he verifies from the Nigerian insurance industry database, whether or not it is genuine. If it is genuine or not genuine, it would show.
The Nigerian Insurers Association is doing a lot of work on this. It is also doing something similar to the marine insurance certificate. This would go a long way to eradicate fake insurance policy.
Does the industry need more foreign investment?
Some years back, we did recapitalisation. Although with the current devaluation of the naira, the capital base of many insurance companies had been depleted, especially, if you have to convert it to the dollar. Therefore, there may be a need to actually call for more capital. If the capital is coming from abroad, why not? Probably, they will come in with better corporate governance. In terms of corporate governance, there may be some positive terms to it. Maybe in terms of product innovation, there could be an advantage.
Are you suggesting that some foreign brands are not doing enough?
We have not really seen their impact. That is to show you that the Nigerian environment is a peculiar environment, and for you to operate there, you have to be able to understand the peculiarity of the environment. Largely, if you look at it, the first 10 insurance companies are still companies that are locally bred, but that is not to discourage foreign investors from coming in. The insurance penetration in Nigeria is still low, and because the penetration is low, there is potential for anyone to come in. So, let them come in, if they are able to bring innovation to increase insurance penetration, that would be good. However, in terms of whether those that have come have made any great impact, we are still watching.
What impact is the ongoing recession having on the insurance industry?
Whatever is happening in the insurance industry is strictly tied to the economy. If there is positive development in the economy, it will affect the growth of insurance positively. Demand for insurance generally is tied to the purchasing power of the average Nigerian. So, if the purchasing power of the average Nigerian is affected by what is happening, definitely the ability to purchase insurance will also be affected. Therefore, the demand for insurance is tied to the well-being of an average Nigerian. And in this time of recession, people can hardly meet their basic needs. If they cannot meet their basic needs, then of course, it will affect insurance.
Some operators in other sectors believe the economic recession comes with some benefits for investors. Is it the same in the insurance sector?
To certain extent, I would say yes. It is in the time of recession that people should insure the more, because you need to protect your assets. Regarding the value of the naira to the dollar, it has depreciated drastically, and what that means is that if it took you N1 million to do a particular project a year ago, with the exchange and inflation rate that has gone up, it will probably take you about N2 million or more, to do it now.
So, it is now imperative for you to protect that asset. And how do you protect the asset? You have to protect the asset by insuring it against risks that could occur, like fire or flood. A time of recession is not a time for people to shy away from insurance; it is the time to insure, in particular, assets that would be costlier to replace if anything happens to them.
What has the CIIN been doing to develop the insurance sector?
We engage in corporate visits to insurance institutions. The insurance institutions are our major constituencies, and these are the insurance companies, brokers and loss adjusters. We have been meeting with them to solicit their support for the institute’s programmes, and to have a feedback on how we can serve them better.
We have also been trying to let them know what the institute has in store for them, as partners in developing the insurance industry. We want to let them know the programmes that the institute has in place to deepen insurance penetration in Nigeria and for the development of our members. We also want to let them know the benefits of being members of the institute.
What are the major contributions of the CIIN to the Insurance Act that is being reviewed?
We are one of the major stakeholders that made input into the law. It is still a draft, so I may not say much on it. Some of the inputs we made are for the betterment of the average professional in the industry and relates to the fact that if you are a professional, you must continue to develop yourself. It is not just being able to acquire the certificate, but you must continue to develop yourself and the new act will address that issue. You have to develop yourself to meet the reality of the present time.
