TheNewsGuru

Tag: Insurance

  • TNG Deal Breakers: Who says life can be insured?

    TNG Deal Breakers: Who says life can be insured?

    Insurers say so! They claim life can be insured for the value placed on it. Do insurers really insure life when life itself has no measurable value in terms of the quantum of money? What then is the value of life? Follow me as we interrogate this all-time proposition by the insurance profession.

    People who often speak about the value of human life usually refer to the sanctity of life as God-given which should not be taken away by any individual or State. Literally, it means the premium placed on such life which must not be willfully extinguished either by the individual human being himself or by another. It is also accepted that the greatest asset is the human asset. In every setting, a value can be defined for the purpose and function of this asset. In the case of life insurance, the asset function is the economic usefulness which will be lacking if the person is gone. And this is insurable. It is the functionality of the human asset in this regard that is assured by insurance.

    Almost all religions frown at the claims by insurance practitioners that life can be insured and therefore, counteract this claim by affirming that only the Giver of life can insure it.

    Insurance and Theology: The Background and Issues, by Myles Tracy, cited an American 89th Congress provision in the Medicare plan where a certain religious cult and other similar cults were exempted from paying social security tax. However, to qualify for such exemption a person must show that he belongs to a sect that teaches against participation in private or public insurance plans. “1 Corinthians Chapter 13 is the often quoted scripture for and against insurance. Proponents declare that if a man is to make love his aim, he must then prudently adopt measures that facilitate the fulfilment of his obligation to his brother or sister.” Whereas the opponents assert that formalizing the love relationship that Paul teaches removes the personal and emotional aspect that love teaches. “They believe insurance is essentially selfish in nature, that its use shows lack of willingness” to live in a faith-based community.

    The unwillingness of many religious groups to accept the insurability of life is even more pronounced in our cultures. However, this aversion stems from a lack of awareness of the solutions inherent in life insurance. For instance, while a typical Igbo rejects the idea of life insurance for the benefit of his spouse and children, the same person contributes his quota in furtherance of the concept of “onye m’echi” which literally translates to “who knows tomorrow”. In other words, the belief in the unpredictability of death and the need to pay some money to the community’s common pool to be used to offset the burial cost if any one member passes away. This narrow definition is now expanded in modern insurance practice aiming to “leave something behind for dependents. Equally desirous is funeral insurance as depicted by the Igbo community funeral levy. 

    Typically before life insurance can be incepted, the insurer must establish that there exists an insurable interest in the person to be insured. It simply means that someone will encounter financial hardship if the person insured dies. Therefore, the insurable interest may be equated to the value of the life insured and in relation to the dependable well-being of dependents. Proof of insurable interest is an essential requirement for life insurance.

    Asset Protection vs Life Insurance 

    In the general description of the insurance proposition, asset protection is often used as the measure of the value of the insured. For many people, it is easier to relate to property insurance as asset protection but not so in the case of life. But a few examples of what constitutes insurable interest may shed light on the concept of life insurance.

    1. Spouses who have young children and own a home. If either of you were to die, it could create financial hardship for the surviving spouse and children. Therefore, you both have an insurable interest in each other and can purchase life insurance for the other person.
    2. Partners in a small business. Each business partner can purchase life insurance from the other so that they can fund the ongoing operation of the business if one partner dies.

    3) CEO or Keyman insurance also share the same fundamental principles of asset preservation. Here you have a CEO or key-man to a business which may be exposed to possible failure in the event that the CEO dies. The advanced level of this type of insurance is the Directors and Officers (D&O) insurance. The majority of corporate organizations must have this in place.

    In each of these examples, the difficulties that parties will be exposed to in the absence of the other is clearly evident. Clearly demonstrated is that in each case, it is asset protection that is being purchased and not necessarily life insurance. It means asset preservation purchased by one party over the life of the other. Perhaps, in an attempt to not adopt a more controversial and unattractive concept like ‘death insurance’, the inevitable conflict with prevailing religious views resulted in the concept of life insurance.

    Besides the likelihood of facing a significant emotional, financial or other types of loss that will negatively impact you upon the insured’s death, the risk factors must be evident and clearly demonstrable. An exaggerated value of expected loss would trigger caution on the insurer side even if other proofs of insurable interest have been ascertained.

    The economic stake that the one taking life insurance on the other must be high enough and impactful to qualify.

    Case Study

    Alexandra Twin, a writer for Investopedia demonstrated other situations of ‘Real World’ insurable interest.

    “Insurable interest is also necessary in life insurance, though this has not always been the case. There are cases where people have purchased life insurance policies for elderly acquaintances strictly because they expect that person’s imminent death. Life insurance regulations have evolved to require a relationship in which the policy owner will suffer a financial loss in the event of the insured’s death. Hardship may include immediate family members, more distant blood relatives, romantic partners, creditors, and business associates. The face value of life insurance policies must not exceed the human life value of the insured; otherwise, the indemnity principle would be violated, creating a moral hazard.

    Also, a policy may not be written without the knowledge of the insured person. This was the case in September 2018 when a California couple was accused of committing three counts of insurance fraud in order to receive $1 million in life insurance benefits. Husband and wife, Peter and Jin Kim purchased life insurance on one of Mr Kim’s clients and listed Mrs Kim as the client’s beneficiary niece. On a second policy, Mrs Kim appeared as the sister of the policyholder. Mr Kim, a licensed insurance agent, also did not inform the company that the client had a diagnosed terminal illness when he submitted the applications.

    Certainly, one may take out a policy on one’s old parents provided they meet the required age limits for life cover. This also holds true for other dependents whose death may expose them to economic hardship. Although, these dependents do necessarily have an insurable interest in their benefactor as to take out a life policy on him, due to the high cost of burial and multi-level dependency in our part of the world, a bequest through life investment policy is ideal. While we will examine, in future, the subject of bequest and its various applications, it is important to note that the term insurable interest can apply to other relations whose death may increase the financial burden borne by the benefactor party particularly, when viewed from the prism of dependency culture pervasive in our community and family system.

    Yet there is some highly elevating principle behind planning to protect those who will be exposed to financial hardship when you are no longer there to provide for them. Life insurance demonstrates our genuine belief that death is real and comes at its own time. A timely acceptance and recognition that life belongs to your Maker. Such thought is elevating because it helps you to live the moment.

    Included in the concept of life savings, asset protection and so on are social security, pensions and annuity. These provide long term investable funds for national development and economic growth if properly used. It goes also to show that insurers believe in the sanctity and longevity of life such as to set a system that pools resources for general welfare and improvement in standards of living.

    Why women should be targets of life insurance

    Consent by the one whose life is being insured must be obtained as a precondition for incepting the cover. 

    It is true that the wrong targeting of life insurance by an increasing army of salespeople who target only commissions resulting in numerous cases of ‘misselling’, has caused the industry in Nigeria reputational issues, yet insurance remains the cheapest method of saving up for the family. Misselling is a concept which describes a misrepresentation of a product or service’s suitability. This often happens when products are sold to the wrong targets. It could be due to ignorance by the agent or outright desire to sell for income considerations.  

    Interestingly, most salespeople target men as the breadwinners to take life policies leaving out the women who really should champion insurance on the life of their men. Women run the homes, and in most cases feel the greatest pain and loss at the demise of husbands and thus, should actually take a policy on the life of the man. Since the majority of our men resist life insurance (based on traditional beliefs that one cannot plan for his death) the women can fund a life policy by increasing the household budget and setting aside a portion to pay premiums. Of course, this should be done with the consent of the man.

    Life insurance is all about affirming the value of life. If you believe that your life is valuable to you and other people who depend on your existence for their own livelihood, then you ought to take a life policy. For those who dislike the term, life insurance, I would say, replace it with “care cover” or “family asset protection,” it would achieve the same purpose of empowerment for the family.

  • TNG Deal Breakers: How digital space can accelerate insurance penetration in Nigeria

    TNG Deal Breakers: How digital space can accelerate insurance penetration in Nigeria

    Technology application to solve problems has always thrived in Nigeria. The various challenges of development have inspired numerous apps embedded in existing technologies to solve problems. In the same mode, newer evolving technologies adapted to emerging markets such as ours are also finding acceptability among users. Take the case banks ATM that provides a transaction notice to the customer whenever the debit card is used at the machine. Although the notices (alerts) come with a cost to the mobile wallet of the customer, it has been wholly accepted because of the benefits.

    Aside from a few emerging insurance startup technology firms offering low-scale embedded policies in partnership with existing insurers, the insurtech frenzy is absent in Nigeria. Yet only technology offers the greatest possibility of increasing penetration in the country. Octamile and Insurpass are in the embedded category; etap and botsurance are on the motor trade while Pula and Izanu are doing agric. There are many more. Perhaps about a total of two dozen altogether are active in the country. Their impact will yet gain traction in the coming years. China and Europe are leading in the delivery of insurance through technology. However, the peculiar Nigerian demography should constantly guide deployment.

    The Nature of Insurance Technology

    Technology is revolutionizing every aspect of our activity and insurance, too is experiencing it. The rapid change is evident throughout the insurance value chain: from the design, underwriting and pricing of products, their marketing and distribution, through to claims processing and the ongoing management of customer relationships. 

    Inclusive insurance offered to customers through technology is not a one-size-fits-all offering but is profiled according to customer type, “the country-specific context and conditions; the distribution models typical for inclusive insurance; other elements of the insurance lifecycle.”

    Profile of the inclusive insurance customer

    It is targeted at the underserved segment of the population with the following profiles identified by IAIS; “Low education levels and low insurance awareness; Low levels and irregular streams of disposable income; Low levels of formal identification document penetration; A living environment that makes it difficult to reach inclusive insurance customers; A lack of trust in insurance providers and a negative perception of insurance.”

    Looking at the above profile, it is not wrong to extrapolate that 80 per cent of Nigeria’s population is within this range which offers investment opportunities for Insurtech firms. 

    The Problem

    In my previous article, Nigeria SDG Status and Insurance Ahead 2023, I established the fact that insurance penetration can only be tackled from an economic perspective, an integral part of government policy driven from atop to achieve some defined goals. Insurance and the role it plays in economic development is too important to be left alone to practitioners only and perhaps, to lobby groups. The uptake of insurance from Nigeria’s population and demographic perspective is very weak. It will require energizing to bring it to pace with that momentum needed to solve economic problems. Without laying a proper growth foundation, even Insurtech startups will be unable to achieve the necessary leap in penetration.

    Historically, Nigeria’s insurance perception was corrupted by a generation of consumers who believed insurance to be a deception. They built up this belief at a time when insurance boomed and uptake, particularly life insurance was high. These people took up long-term savings policies in the hope that the value of the investment would appreciate throughout the policy. However, hyperinflation dealt with the value of the final benefit to such an extent that it was almost worthless. In addition, a story of ‘small prints’ (meaning hidden and unexplained clauses) was waxed into it and subsequently passed on to other generations. The result is the destruction of the image of insurance on two fronts;

    1)      Avoidance or reneging on promises and thus, not trustworthy

    2)      Insolvent and low investment profiling 

    These two problems have lived with insurance and insurance with them up to the moment. The insurance category that took the greatest hit is personal line insurance whereas wholesale corporate insurance emerged as the growth driver of insurance in Nigeria. 

    Responsibility

    The ultimate promise to the individual who purchases insurance (insured) is to pay his claims when a loss occurs. Insurers should go a step further in the in-between period of inception and discharge of responsibility. The often quoted axiom, ‘the customer is king” should not be looked at exclusively from the standpoint of revenue but equally the acceptance of responsibility for full disclosures to the insured of all particulars that may render his expectations unrealizable. For instance, if insurers had in the time past mentioned herein explained to buyers of long-term insurance the probable effect of double-digit insurance, and offer hedges at a cost, much of the damage to insurers’ image would have been mitigated. Even now, revenue generation seems to be the driving force of customer relationships. The Insurtechs should do better to create awareness of the products they distribute and not hide under virtual cover. Insurers may develop a diverse and continuous training module aimed to equip salespeople with customer orientation and expectations. These pieces of training should form a component of a going-to-market strategy for organizations.

    These arguments may be countered by pointing at AI (Artificial Intelligence) specific methods for the creation of an insurance value chain in the digital space. ‘Customer-specific targeted marketing, Chabot, Robo-advice, internet sales and price comparison sites, Social media and SMART phone/device distribution channels” have been recognized by regulators to provide real-time and need-based products to consumers. 

    Indeed the report, Increasing Digitalization in Insurance and its Potential Impact on Consumer Outcomes”, an Issue Paper by the International Association of Insurance Supervisors (2018) identified these flaws; “Social media applications may not be transparent to consumers. This can result in consumers being “nudged” without being aware – such as when consumers are confronted with unsolicited offerings based on their use of the internet. There is a risk that customers are persuaded into buying products or add-ons that are not in their best interest.” 

    The Paper also endorsed the benefits and says “the use of social media may enable insurers and intermediaries to better reach target markets” including possible “reduction in marketing costs, improvements in customers’ experience.”

    Interestingly the Fintech Forum of IAIS states in its 2022-2023 Strategic Roadmap that in-depth analysis of the Insurtech trend will continue to focus on “safe, fair and ethical adoption of Artificial Intelligence and Machine Learning and the use of governance of data.”

    Further underscoring the importance of customer protection, the group is also studying blockchain, Distributed Ledger Technologies and Application Programming Interfaces (APIs) and open data which are key drivers of financial technology.

    Solutions Provider

    To situate insurance as providing solutions to people’s needs is an unavoidable basis for planning the success of Insurtechs. This requires that scale and pricing based on the principle of affordability should be major components at play from the outset. Any projection based on premiums and profit would fail to attract and impart larger groups.

    The time of the generalists is over. Embedded insurance delivers insurance where and when it is needed. Insurance of the future now thrives on solving specific problems of the consumer using big data. An article in The Digital Insurer (TDI) describes the new insurance model thus, “The embedded insurance of today is a seamless – or near seamless – customer journey that allows the consumer to make a purchase decision without the need for a hard sell or hard-fought customer acquisition on the part of the insurer.”

    There are possibly a dozen important and compulsory insurance legislations that could be derived, micro-managed and offered where they are needed and in partnership with emerging Insurtech startups. The low-hanging fruit in this journey is health and motor insurance. Compared to other types of insurance, these two drive everyday activity. There is still a lot of investment to be made in the right technology to achieve the desired scale. Most importantly, implementing government agencies would require interface technologies that complement private sector Insurtech entities. Therefore, collaboration is key, and increased awareness concerning data protection laws must be a high priority among players to not deepen the existing distrust towards insurance.

  • Nigeria’s SDG status and insurance ahead 2023

    Nigeria’s SDG status and insurance ahead 2023

    The World Bank SDGs’ and ranking of countries with highest and lowest contributions of the insurance sector to SDG goals’ attainment provided the focus of this article and the near pyrrhic this-is-it for me and my country. On the first glance of this ranking, it looked like Nigeria sits atop the international ranking and I thought this presents, at least, one moment to gloat and brag for sake of the country and patriotic pride. Indeed Nigeria is actually the first on that ranking table displaying an overdose of reds on all metrics of the SDG indices. 

    Nigeria led as the leader of the laggards. A clear first from the bottom up.   

    In a June 2021 report, “Insurance Sector’s Contribution to Sustainable Development Goals (SDGs”) authored by Susan Holliday, Inna Remizova and Fiona Stewart, the three authors noted, “Insurance is an important part of the financial sector. It supports broader economic and general well-being in developed economies in a way that is so entrenched and accepted that it is not widely recognized.” The authors are leading experts at World Bank’s Finance, Competitiveness, and Innovation (FCI) Global Practice. 

    The assertion by the authors is true regarding the entrenchment and acceptance of insurance in developed economies. But that is not the case with most African economies including Nigeria. However, it is inexcusable that Nigeria with the size of its economy should have its insurance contributing the least to the Sustainable Development Goals.

    The entrenchment and wide acceptance of insurance in the economic and general well-being of the people in Nigeria is a goal that must be pursued by the next government to broaden the scope of the economy and reduce dependency on the State.

    Our country’s overall performance on the global SDG dashboard is abysmal. Viewed from the lens of insurance contribution to this performance, it would be correct to say, we are non-starters. But we must get our insurance act together by seeing the opportunities for development in the report and thus, filling the gaps in the economic framework and policies driving inclusive growth.

    With an overall 2020 SDG score of 49.3%, well below the 70% pass score, Nigeria’s SDG stage one insurance contribution dashboard shown in ‘red’ indicates that ‘major challenges remain’ with the indices. SDG 1, 2, 3, 8, 10 and 11 are all in red and classified as countries where significant progress is still needed to meet SDG goals.

    Insurance is seen as having a stronger impact on, No Poverty (SDG1), Zero Hunger and Food Security (SDG2), and Decent Work and Economic Growth (SDG8), whereas SDGs where insurance achieved significant impact included, Climate Action (SDG13), as per its role in disaster risk financing, Safe Cities and Communities (SDG11) in its investing and underwriting of infrastructure projects.

    Insurance does significantly contribute to Good Health and Wellbeing (SDG3) by helping reduce out-of-pocket expenses and encouraging the use of healthcare facilities. Study and tracking are still ongoing to see how through insurance inequality (SDG11) can be reduced.

    Nigeria’s insurance penetration is about the lowest in the world at 0.33% and less than 1.3% by the global average. The insurance penetration rate is the ratio of premiums written compared to the country’s GDP. Of the nearly half trillion GDP and probably still Africa’s largest economy, insurance accounts for less than 1%.

    However, the weak economy provides the best opportunities for growth and so also is the potential for the development of the insurance sector. The financial development index, government effectiveness and regulatory quality show promise that the market can grow if it is properly incentivized.

    Interestingly, countries with high levels of insurance penetration have made the most progress in meeting their SDG commitments. In contrast, countries with lower levels of SDG attainment (and mostly low-income and lower-middle-income countries) have low levels of insurance penetration.

    “Insurance can play a significant role in helping countries achieve the UN SDGs in terms of economic growth, social inclusion and environmental protection. This can be achieved through the risk transfer mechanisms of households, businesses and the public sector.”

    Since 1945, Nigeria has legislated at least four additional compulsory insurances. Up till now, the oldest law, the Third-party Motor Act has achieved about tenth compliance and subscription. The processes for integrating compliance into economic activities is not in place. Perhaps, if there is sufficient interaction between insurers and national digital policy, there could be welding together of these pieces of legislation into enforceable policy. Aside from these compulsory laws embedded into the Insurance Act and other related laws, there is no insurance policy at either the national level or the state. 

    Case for National Insurance Policy

    A national policy on insurance would have ensured that all the legislations on insurance are integrated within the process of economic activity. There is the group life insurance, school shuttle, and employees’ compensation. Buildings/construction, and import/export trade insurances are also compulsory. There is also health insurance which drives universal access to healthcare. Local content provisions of the Cabotage Act in the onshore maritime transportation as well as the oil and gas business. These can be strung together as unavoidable insurances for each sector which warehouses the law.

    Therefore, the responsibility lies with the National Insurance Commission (as regulator and representative of government) and insurers in Nigeria to make the case for supporting insurance market development by drawing more attention to contributions the sector can make to achieving national SDGs. This effort may draw investors, donors, and international organizations to focus their insurance market development activities where the greatest potential for attaining SDG goals is provided.

    Ahead of 2023 expectations of a new government, a starting point for this to evolve would be at the economic management team at the national level. There should be an insurer representation in the team.  Insurers should organize to drive this important inclusion and cascade it down to state levels gradually. Insurance cannot grow in isolation but can only flourish under an environment of economic development that it supports and sustains. 

    Undoubtedly, strong micro, small and medium-scale enterprises (MSMEs) is the incubation hub of a vibrant economy as well as provide sustainable insurance development. However, the MSMEs have suffered greatly and virtually collapsed under heavy inflation, hostile exchange rate regime, unsupportive port operations and a host of other economic environment factors that had rendered the sector comatose.

    Regulatory Framework to support Insurtech

    Digital technologies are now being deployed to drive everyday insurance like motor and health insurance. They are embedded in such a way that their uptake is guaranteed and premium and claims payment are convenient to both buyer and supplier respectively. This new activity is called insurance technology or Insurtech. It is targeted at the underserved of population and makes use of non-core insurance principles to deliver products. The channels of distribution are evolving worldwide in most emerging markets. Nigeria, with one of the lowest levels of insurance penetration, would need digital assets to reach more people.

    To achieve this would require a regulator who can adopt the International Association of Insurance Supervisors (IAIS). The question now is whether the Nigerian insurance regulator is prepared. Fortunately, some activity is ongoing in this direction. Nevertheless, the regulator can demonstrate a stronger willingness to adapt by setting up a new digital directorate manned by persons with relevant digital skills and knowledge to drive Insurtech quickly. Noting may be achieved by tucking away this evolving tool and the possibility it holds as the future of Nigeria’s insurance development. The IAIS issue paper on the ‘Use of Big Data Analytics in Insurance” is reference material for regulators and new digital entrants. 

    Christian Henning of South Africa’s Reserve Bank agrees with this thinking when he urged supervisors at A2ii’s Public Dialogue on SDGs to “upskill on the goals, to have a greater understanding of how they relate to the financial system and plug gaps in knowledge and data either through enhancing regulatory data or by instigating national repositories”.

    Besides helping to develop a digital framework for the regulator, this directorate would initiate and husband the integration into the financial system of the numerous legislations pointed out in this article and present this to the government and the stakeholders. Fortunately, IAIS and A2ii (Access to insurance initiative) have been collaborating on advancing inclusion in this aspect. On the same table with these two are the Sustainable Insurance Forum and Insurance Development Forum.

    Good Governance

    Good governance is a necessary precondition for insurance to grow when considering that confidence is key to the insurance contract because they are typically long-term. An environment which guarantees stability in the macroeconomic framework under which insurers operate is absolutely required.  

    Government effectiveness as a World Bank’s measure of the quality of public and civil service captures the perceptions of institutions and the degree of their independence from political pressures. In addition, “the quality of policy formulation and implementation, and the credibility of the government’s commitment to such policies” are components of governance that viewed from the prisms of SDGs, further dips Nigeria’s performance. 

    In conclusion, the government of 2023 and beyond should constitute an economic team that harvests the repository of risk management and insurance knowledge in the country to build a sustainable economy. It is no longer debatable that high-income countries also have strong insurance. Beginning with existing legislations, technology and public education can combine to integrate insurance into the social and economic activities of our people.

  • TNG Deal Breakers debuts on TheNewsGuru

    TNG Deal Breakers debuts on TheNewsGuru

    In a bid to simplify the causes and effects of transactional failures between parties in an insurance contract as well as present the multidimensional issues that characterize and relate to living risks, The Deal Breaker is here birthed.

    How can someone claim to insure life? Can insurance protect and insure life? “Why should I trust you and believe?” “What are you offering?” “What do you bring to the table?” And all similar questions that hold back insurance decisions will be addressed in the coming days and weeks in this column.

    The Deal Breakers will probe and uncouple the concepts binding parties to a transaction and answer important questions of trust which is essential to the insurance business.  Readers will see how insurance is morphed into everyday living and losses its old-school tag.

    Set on the concept of simplification, an interplay of well-curated writings will expose readers to the ordinary meaning of insurance and its multisector, multidisciplinary nature and connect these to socioeconomic realities. Every sector will be explained in its relationships with insurance principles.

    Anchored by Ifeanyi Ugwuadu who has garnered a cumulative business and insurance communication experience of nearly three decades, this page will leverage his immense hands-on skills to deliver robustly and thought-provoking insight into the world of insurance in the ordinary sense.

    Speaking further to TheNewsGuru.com (TNG) on what he brings to readers, he stated, “I wish to help people to get on with life and live free without fear of what might come with the everyday hustle and bustle. The more people develop confidence in facing life’s challenges, the easier it becomes to face tomorrow.”

    “The wellbeing of the individual comprises the assurances of his health, family, business, finance, employment and the provision of necessities of living,” he explained, adding that “when worries of these everyday concerns are eased, the individual can courageously move forward and achieve set goals.”

    “Myths and hearsay would be busted along the line”, he promised, to give people freedom of choice “while aligning heavily to the maxim, ‘customer is king’ to explain the enormous benefits of transactional success in every bit of insurance.

    Every Tuesday on this page, the interconnectedness of the entire workings of the economy and the financial system with insurance, the benfits to individual and society will occupy centre stage in the analysis of issues.

  • How we recovered from #EndSARS losses – Lagos State Govt

    How we recovered from #EndSARS losses – Lagos State Govt

    The Lagos State Government has said that adequate insurance arrangements helped the State underwrite losses incurred during the #EndSARS protest.

    Lagos State Commissioner for Finance, Dr. Rabiu Olowo stated this in his keynote address at the grand finale of the Lagos State Civil Service Insurance Week.

    Olowo explained that the State’s insurance policy helped Lagos with the challenges of replacement, reinstatement and repairs of damaged government property in the aftermath of the protest.

    “Also, the COVID-19 pandemic that is still ravaging the entire world is another challenge that was catered for by the insurance industry.

    “The consortium of underwriters provided a ‘special package’ for medical personnel involved in the treatment of COVID patients.

    “This was done in the form of Corporate Social Responsibility (CSR)”, he said.

    The Commissioner, corroborate the views of Governor Sanwo-Olu, saying that embracing an appropriate insurance policy is one of the prudent decisions that anyone can make because different forms of unfortunate incidents happen that cannot be controlled.

    He averred that Lagos is forward-thinking and particular about the safety of its workforce and, therefore, insures them against any unforeseen occurrences, just as it pays benefits of deceased employees.

    Olowo revealed that the intention of the State Government, as well as that of its partners, to raise the level of awareness on the importance of insurance will be achieved even beyond the expected threshold.

    He said, “In addition to raising public awareness about insurance, I am glad to inform this gathering that to make the process of accessing insurance claims by government employees less cumbersome, the Lagos State Ministry of Finance, through its Insurance Department, has concluded zoning the activities of the Department, thereby decentralising its operations.

    “The planned decentralisation will take into cognisance the five ‘IBILE’ divisions of the State, where zonal officers will report activities and claims to the headquarters for promptness, efficiency and effectiveness.

    “With the initiative, distance will no longer be a limiting factor to access insurance claims by government employees”, the Commissioner noted.

    Also speaking at the event, the Permanent Secretary, Ministry of Finance, Mrs. Oyeyemi Ayoola, unveiled the digitalised insurance platform for Lagos civil servants.

    “The Ministry saw gaps in the system and wants to digitalise its insurance processes and remove every form of delay in processing civil servants’ benefits in the State. The unveiling of the initiative will enable each civil servant to fill in details of their beneficiaries using their mobile phones”, she said.

    The highpoint of the grand finale of the event was the Raffle Draw segment where Mr. Salawu Dirisu Anataku, a Porter with the Ministry of Wealth Creation and Employment and Mrs. Tawakalitu Akindele, Principal Executive Officer with the Ministry of Special Duties and Inter-Governmental Relations emerged winners of a car each.

    Also, Mrs. Mobolaji Felicia Olabisi and Mr. Adeyemi Akeem Babatunde won two and three bedrooms apartments respectively at the event.

    The Lagos State Civil Service Insurance Week held with the theme: “If You Can Be Insured: We’ll Bear Your Risk”.

  • The power of Okugbe – Francis Ewherido

    The power of Okugbe – Francis Ewherido

    By Francis Ewherido

    As a chartered insurance practitioner, the enormous power of Okugbe (unity, togetherness and pulling of resources together) naturally resonates with me.

    How do you imagine that you pay N70,000 premium annually to insure your house that is valued at N50m, yet if the house is razed, you get about N45m in compensation from the insurance company, depending on policy conditions like excess? Or you do a comprehensive motor insurance and pay N250,000 for a vehicle valued at N5m and if the vehicle is stolen, you get paid between N4.5m and N4.9 (depending on policy conditions like depreciation and excess).

    How is that possible? It is the power of okugbe, which is, pulling the resources of many people together and compensating those who suffer losses from the pool.

    Okugbe is powerful; it makes impossible tasks possible, it makes unwinnable battles winnable, it creates giants out of Lilliputians. We see the enormous power of Okugbe among ants and bees. Lions go into a herd of elephants, isolate a juvenile elephant, bring it down and feast on it, something that is unthinkable with only one lion, but possible because of the power of Okugbe.

    Individuals, nations, groups and communities have made giant strides because of the power of okugbe. Over time, there were many families, who made huge successes in business due to okugbe. People rumoured that some of these successful families and business partners were using diabolical powers. It is not true, it is the enormous powers of Okugbe. Nothing compares to okugbe, especially if it is based on equity, fairness and justice.

    I have also seen the destructive power of disunity (the absence of Okugbe). Hitherto great families and relationships have been decimated because some family members or friends sowed seeds of disunity. There is no country in the former USSR that is as powerful as USSR today, not even Russia. Once USSR disintegrated, its enormous powers went with it.

    Knowing the enormous powers of okugbe first hand, I did not hesitate when the President General of Urhobo Progress Union Worldwide, Olorogun Moses Taiga, invited me to join other Urhobo patriots to raise N300m to start a microfinance bank, incidentally named Okugbe MFB, which is primarily meant to provide easy access to loans for the ewheya (women) and youths (ighelle) in Urhobo land. These are two critical groups in any society. The youths represent the future of any society, while women stabilise the families. They are also helpmates and sometimes breadwinners. A friend told me some time ago that many men (and families) in the town, where he lives, would have gone hungry by now, but for their wives. The wives are the breadwinners in most of the families, according to him. With unemployment and ill health decimating the menfolk, the women have stepped in to fill the gap.

    I grew up to see the average Urhobo woman as very hard working. Some of them did many income-generating tasks (farming, trading, tailoring, etc.) simultaneously to support their families. The situation has not changed. Urhobo women are in every sector of economic endeavour. Go to any building site in Urhobo land, there are more female casual workers than men, especially at concrete stages and laying of blocks. Some of these female workers are pregnant, while some are nursing mothers. Some of them are actually trying to work and raise money to start a business. In transportation they are there. They dominate trading and retail business. Setting up a microfinance bank partly targeted at Urhobo women is therefore a no-brainer. They thoroughly deserve it. Moreover, if you want to provide support to lift families out of poverty in Urhobo land, supporting the women is critical.

    Someone wondered why we are leaving out the men. No one is leaving the men out. It is just that the initiative is primarily targeted at youths and women. That does not shut out the men. “Primarily” infers that there is “secondarily.” And talking about youths, they include young male adults or are young male adults not men? The level of unemployment among youths in Delta State, especially Urhobo youths, is scary. I saw it first-hand 2015 during the election campaigns, when I went around Urhobo land with a governorship candidate. Every village we went to had an army of unemployed youths. This makes it important to make them targets of such an initiative. In fact, we need many more initiatives targeted at Urhobo youths: mentorship, career guidance and counselling, skills acquisition centres, access to finance, etc. The problem goes beyond money. Some have no formal education, some are unemployable, some have defective education and others have not developed any skills or innate abilities. But many are rearing to go, but are handicapped by funding. The microfinance bank will come handy for the last group. The problem of youth unemployment is not something one person or institution can solve and it will not be solved in day, but okugbe (collaboration) overtime can do a lot. There is strength in togetherness.

    Okugbe is about unity, no room for political divisions and distinguishing one clan from the other in this project. There is just one common purpose: chase poverty out of Urhobo land. Many people at individual levels are doing their bit; please continue your good works, but also remember the power of Okugbe. There is strength in collaboration and that is what this project is all about. We need 300 Urhobo patriots, who can invest a minimum of N1m each to enable the bank take off. We have also set an upper limit of N20m per investor. This is to ensure that no single individual has controlling shares as to derail the bank from its founding objectives. Subsequently, there will be another drive to raise additional N1.2b to bring up the paid capital to N1.5b. This will enable more Urhobos buy shares of the bank because the shares will be sold in smaller units. This will also increase the lending capacity of the bank.

    It is easy to be scared by the enormous task at hand, but with the power of Okugbe anything is possible. The mortality rate of microfinance banks is also very high. The reasons are many: poor corporate governance, high defaults in loan repayments, regular changes in government policies, lack of requisite human capital, infrastructural deficiencies, corruption, unethical practices, etc. We are going to work round to check these anomalies when the bank takes off and ensure that it endures. Every Urhobo person has an obligation, everyone should be a watchdog, to ensure that the bank endures and continues to bring succour to our youths, women and others via Okugbe MFB when it finally takes off. We should also not forget the subscribers, who are putting their money down to bring this dream to fruition. At some point they should get returns on their investment.

     

  • EndSARs: Deaths, destructions and insurance – Francis Ewherido

    EndSARs: Deaths, destructions and insurance – Francis Ewherido

    By Francis Ewherido

    Those who started the legitimate EndSARS protest against police brutality could not have imagined the deaths and destructions that followed. Officially 69 people have been confirmed dead at the time of writing. The value of properties either stolen or destroyed is not yet available, but it is in billions. My condolences to families who lost loved ones. Bereavement, especially sudden deaths like these, are very tough to deal with. I also sympathise with those who lost their valuable properties and investments. Many businesses, especially SMEs, were looted, vandalised and emasculated by hoodlums.

    What do these deaths and destructions portend for the insurance industry? You can say, on the one hand, very adverse effects on an industry, still reeling from the negative effects of COVID-19. In addition, insurance companies, which are working towards meeting recapitalisation deadlines, will now be saddled with large claims. Do not be surprised if some insurance companies record losses or are unable to pay dividends to their shareholders at the end of this financial year.

    You may also choose to look at impending claims from a positive perspective. The carnage of the last few days bring to fore the importance of insurance protection for individuals and corporate bodies. The destruction can lead to an upsurge of demand for insurance products. What the events of last week have shown is that insurance is an essential aspect of our daily individual lives and our business or corporate life.

    We shall naturally start with people and deaths. Human life is invaluable and irreplaceable. Any loss of life diminishes, not only the immediate family, but our common humanity. While insurance will not resurrect a dead loved one or replace a lost limb, it does provides some relief. The family of an insured, who has a life policy and died during the protests and carnage that followed, is entitled to the full sum assured of the life policy. For instance, if an insured had a N30m life policy, his family is entitled to the full N30m. It does not matter whether he took the policy only three weeks before his death and had paid only a fraction of the N30m. Also, if an employee is part of group life insurance policy of his company and tragically loses his life within the last one week, his family is entitled to his death benefit. A lot of the time, the benefit is three times the annual emolument of the employee.

    Also, if a holder of a personal accident insurance dies and the cause of death is traced to an accident, his family is entitled to the benefits. This also applies when the person is part of a group personal accident insurance cover. If the person suffers a broken limb, loses a limb, etc., he is entitled to compensation according to the terms of the policy. Such accidental situations covered include being knocked down by a vehicle, falling off a building or staircase or falling into a drain, etc. But if an insured dies as a result of the aggravation of a pre-existing ailment, like an asthma patient having an attack while running away from hoodlums during the mayhem, the family cannot claim under this policy because such a death cannot be classified as an accident.

    Also if a person dies or suffers injuries during this period, the employers’ liability policy of his employer’s insurance company will be liable, provided the death or accident happened in the course of employment. That is to say the employee died while carrying out official duties. Any deaths, accidents or illnesses outside official duties is not covered under this policy. During the week, we also saw videos of people, who were knocked down by vehicles during the chaos. If the vehicles concerned can be tracked, the insurance companies that insured the vehicles are legally liable for third party bodily injuries and death. If it is third party property damage, they are liable to the tune of N1m.

    Which brings us to the import of material damage on insurance since the protests were hijacked and degenerated into arson, looting and violence. Many private and public properties were burnt and looted. There are two issues. Do these properties have insurance and do the insurance policies adequately protect these assets against all the risks that just occurred? Let us start with the fire and special perils insurance. A typical fire and special perils policy excludes fire resulting from “… riot, civil commotion, war invasion, act of foreign enemy, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, military or usurped power.” But you can get an SRCC (strikes, riots and civil commotion) extension to your fire and special perils policy.

    The implication is that those with fire policies, but without the SRCC extension, whose buildings and contents were destroyed, are not entitled to insurance compensation. Those who also insured their building only with SRCC extension, but did not insure their contents against fire, will only be compensated for damage to their buildings. They will have no remedy for loss of, or damage to, contents. This also applies to owners of vehicles that were burnt, stolen or vandalized during the mayhem. Those with third party insurance have no remedy at all. Those with comprehensive motor insurance policies, but without SRCC extension, are not entitled to insurance compensation based on the terms of their policies.

    have business premises, malls and shops that were looted and set ablaze. Which peril caused the loss/damage, fire or theft? That will be for the loss adjusters to determine. The fire policy will pay for losses/damage caused by fire, while theft insurance will pay for damage/loss caused by theft. Usually, some businesses purchase combine fire and theft insurance. At times like this, it is a very wise decision.ENDSARS: DEATHS, DESTRUCTIONS AND

  • EDO 2020: INEC insures over 20,000 ad hoc staff against death, accident

    EDO 2020: INEC insures over 20,000 ad hoc staff against death, accident

    The Independent National Electoral Commission says it has insured all its staff and the 20,974 ad hoc staff that to be deployed ahead of the September 19 governorship election in Edo State.

    It said a comprehensive insurance had been put in place for them and those who would serve in the October 10 governorship election in Ondo State.

    INEC’s National Commissioner and Chairman of its Information and Voter Education Committee, Festus Okoye, told newsmen on that the election officers would be insured against deaths and other election hazards.

    There have been apprehensions from within and outside the state that the election, which holds on Saturday, may be marred by violence. This had prompted INEC, security agencies, prominent individuals and organisations to sue for peace.

    No fewer than 14 political parties would participate in the election, but the two major parties in the state; All Progressives Congress and Peoples Democratic Party, continue to accuse each other of planning to foment trouble during the exercise.

    The Oba of Benin, Oba Ewuare II, had on September 2 chastised the candidate of the PDP, Governor Godwin Obaseki; that of the APC, Pastor Osagie Ize-Iyamu, and some other party chieftains over the pockets of political violence and tensed political atmosphere in the state.

    In a meeting with the candidates, their running mates and other stakeholders at his palace, the monarch described some of their utterances and activities during the electioneering as immature.

    Many previous elections across the country have been marred by violence, during which some election officers were killed.

    But in a bid to assure its personnel of its commitment to their safety in the forthcoming election, Okoye said the staff members of the commission were already insured but that the ad hoc staff would be insured.

    Okoye said, “All the ad hoc staff engaged by the commission for the purposes of the Edo and Ondo governorship elections will be covered by insurance and it’s a comprehensive insurance covering deaths, accidents and other election hazards. It’s a group insurance that covers every individual given a contract by the commission as ad hoc staff. The staff of the commission are already covered and there is no need to cover them a second time.”

    The National Commissioner also said most of the ad hoc staff had been trained, except for Collation Officers who are usually trained three to four days to the election.

    He said corps members would be deployed as Presiding Officers and students of federal tertiary institutions as Assistant Presiding Officers. While promising that each of them would be given a contract and their allowances paid promptly, he added, “We plead with them to always supply their correct details and account numbers to prevent late payment from the bank.”

    He added, “The commission will deploy a total of 20,974 election officials in Edo State. We have 18 Local Government Areas in Edo State, so there will be 18 Local Government Collation Officers; 192 Registration Area Collation Officers, 263 Supervisory Presiding Officers and 2,627 Presiding Officers.

    “The commission will also engage a total of 13,557 Assistant Presiding Officers and 3,259 Presiding Officers (Voting Points) and we will also engage not less than 841 Reserves. There will be one Returning Officer for the election. There are 2,627 polling units and a registered voter population of 2,210,534. Our training programme has been robust and we are confident that our trainers have done a good job.

    INEC had said out of the 2.2 million registered voters in the state, only 1.72 million collected their permanent voter cards, while 484,000 persons who did not collect theirs would not vote.

    Mahmood meets Obaseki, Ize-Iyamu, others Monday

    Meanwhile, INEC National Chairman, Prof Mahmood Yakubu, will on Monday hold the last stakeholders meeting in Benin, the state capital, while the ad hoc staff would be deployed on Friday prior to their resumption on Saturday. He noted that non-sensitive materials had been deployed to the Registration Areas already.

    Okoye said, “The commission will deploy the ad hoc staff to the Registration Area Centers on Friday, September 18, from where they will be deployed to the polling units at first light on Saturday. As a prelude to the election, the Chairman and National Commissioners will hold the last stakeholders meeting on Monday and sign and the political parties and their candidates will sign a peace accord on Tuesday.”

    Yakubu had said on Thursday that the National Peace Committee, INEC and every conscientious Nigerian had been concerned about the fear of violence in elections.

    APC, PDP clash over alleged influx of thugs, arms purchase

    Meanwhile, the PDP and APC in Edo State have again accused each other of importing thugs into the state as well as purchasing arms for their supporters ahead of the election.

  • Alleged N180m Insurance Breach: Reps C’ttee demands receipts of all transactions from Fasahal , A&G, others

    Alleged N180m Insurance Breach: Reps C’ttee demands receipts of all transactions from Fasahal , A&G, others

    …gives 7days ultimatum for submission

    …says you can’t spend Nigeria’s money without proper reconciliation

    …ask NigComsat to submit all documents on insurance transactions

    By
    Emman Ovuakporie

    The House of Representatives Committee on Insurance and Actuarial Matters on Tuesday asked A&G, Fasahal Insurance, others to submit documents on how N180,992,83635 was paid as premium on NigComsat satellite launch within the next seven days.

    Speaking at the ongoing probe of illegalities in the insurance sector, Chairman of the committee, Hon Darlington Nwokocha gave the directive to the critical stakeholders.

    The committee in session had raised a query on the proper identification of Marsh a United Kingdom based Insurance outfit and another Marsh based in Abuja as the lead insurers of NigComsat 11 launch in 2014.

    Responding, the Managing Director of NigComsat, Mrs ,Abimbola Alale explained that any company can have a subsidiary but “in this case we dealt with Marsh that’s solely based in UK noy Marsh FJC in Abuja.

    Apparently not satisfied with her explanation, Hon Nwokocha demanded for more clearer explanation from the MD of Fasahal, Mr Frederic Adejo.

    Adejo in his explanation told the committee in session that”Marsh is not in anyway related to the Marsh in Nigeria and if not for the Covid-19 issue they would have been represented here in Nigeria at the investigative hearing.

    Asked how much was paid as premium to the lead te-insurance I (Marsh), Adejo said”N180,992,836.35 was paid in 2014 and that he shopped for Marsh outside the Nigerian shore.

    At this point, the MD of A&G Mr Abiola Ajibowu was asked to explain the role his company played in the whole insurance transaction.

    He told the committee that”everything about the transaction was okay particularly the insurance policy which is the most important document.

    The committee members frowned at his lackadaisical response to the issue of monies spent on the transaction by not giving any vivid financial breakdown.

    Nwokocha had to reprimand him saying”you can’t spend Nigerian money without proper reconciliation and that’s what we demand of you.

    A member of the committee, Hon Olumide Osoba at this point moved that a grace period should be given to all the stakeholders to furnish the Committee with all relevant documents.

    The Chairman put the motion on a voice vote and the ays had it.

    They are all expected to appear before the committee on August 28th and 31st with all relevant documents.

    The investigation continues on Wednesday.

  • Illegal insurance activities probe: House C’ttee gives NNPC, Mutual Benefits, others 10 days to submit vital documents

    Illegal insurance activities probe: House C’ttee gives NNPC, Mutual Benefits, others 10 days to submit vital documents

    …says we can’t sweep over $100m claims under the carpet

    …insists only CEOs are expected at the panel

    …those who failed to show up , we’ll use our legislative powers to compel them

    Members of House of Representatives Committee on Insurance and Actuarial Matters on Monday gave the Nigeria National Petroleum Corporation, NNPC and other insurance companies an ultimatum of ten days to submit vital documents to fast track its investigative hearing.

    The lawmakers in session also demanded that only Chief Executives are expected to appear before it as what is involved is over $100m insurance claims to non-existing assets overseas.

    Speaking at the investigative hearing, Chairman of the Committee, Hon Darlington Nwokocha said:”We can’t sweep over $100m insurance claims under the carpet just like that hence we demand the presence of CEOs.

    At this point, Rep Mark Gbillah, PDP, Benue moved a motion that since the CEOs are not present and their representatives cannot answer the required questions, the meeting should be rescheduled for another auspicious date.

    But before hitting the gavel, Nwokocha explained to those present that”most of the organisations present have not submitted their documents except NNPC which submitted just today”.

    I want to assert one thing before my colleague move the motion, let me talk to all of us particularly those of us sitting today, we have a 10-day investigative hearing that will be taking place everyday, it’s not a joke.

    “The petitions we have already revolve around over 100 and something million dollars across board within the NNPC and its environs, on insurance related matters. And it’s not something we can sweep under the carpet, it’s not possible.

    Before my colleague will move the motion to define finally the way to go today, there are one or two things I want to mention before today’s meeting with NNPC and insurance companies and brokers. We sent in 211 documents requesting for one document or the other and we have reasons why we have requested for each of those documents.

    “For instance, we requested for comprehensive and complete schedule of all insured assets of NNPC and JVs on class basis 2014 only till date. The reason is this, to compare insurance certificate risk with premium paid and find out where premium was paid for non-existent assets.

    “And we cannot do magic to get these information because already we have enough information from everywhere but we must compare what we have with you are bringing. What the insurance companies will bring, what the NNPC will bring and what the larger society has brought, so that we give everybody fair hearing.

    “And this is not something we are talking and some people are taking it so lightly that they are doing some other businesses here and there. We cannot tolerate that. When we invite you for any reason you’re are not here, we will compel you to come; we have the mechanism, we have the instrumentality to drive the process to make sure that you will come.

    “That is why when the President of this country comes to present his budget, he comes to present it and he bows and he leaves. Because the two principal things that function in every economy is income and expenditure. So when you come for an income which we always encourage you to make sure that the income you get it quite in, is not when you have spent it and we want to find out how you spent the money, you now begin to give us one reason or the other. It won’t work, we must summon you to come, definitely. And we don’t want to get to that level,” Hon. Nwokocha urged.

    “I am requesting that all vital documents bordering on your operations from 2014 till date should be submitted in due time.

    “We have hired consultants both here and overseas to help conduct the forensic audit and we will soon send them to you for the forensic audit.

    “To get to the bottom of this, only CEOs can conveniently answer our questions but those who refused to show up we’ll use our legislative instrumentality to compel them.

    “We expect all critical stakeholders involved to be here on the 31st of August for the hearing.

    The hearing continues on Tuesday.