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Business News

How indiscriminate premium discount is killing the insurance sector

Experts in the Nigerian fledgling insurance industry have bemoaned the current spate of improper discounts on premium rate being granted by some underwriters to their clients. The insurance practitioners described the practise as unfavourable to business.

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Insurance in Nigeria, FBN Holdings Annual general Meeting, FBN General Insurance Limited CEO Bode Opadokun, FBN General Insurance Limited 2018 financial result

Experts in the Nigerian fledgling insurance industry have bemoaned the current spate of improper discounts on premium rate being granted by some underwriters to their clients. The insurance practitioners described the practice as unfavourable to business.

Where the problem is: The operators stated the lack of cooperation among insurance operators is fueling the unethical activities in the insurance industry within the country, and the ripple effect is the slow pace of progress in the sector.

Why this Matters: The insurance sector in Nigeria is a nascent one and unwholesome practices such as the indiscriminate premium discounts are stunting the growth of the industry at the moment. For this reason, stakeholders need to combat the menace of indiscriminate premium cut so that underwriters will be buoyant enough to pay claims as and when due.

Insurance in Nigeria

Insurance

Speaking on the issue on condition of anonymity, a Chief Executive Officer of one of the insurance firms in the country said, “The insurance industry lacks cooperation. It is a winner-takes-it-all type of industry and that is what we promote. That is why you will see companies reducing premium by 50% in order for them to carry the risk 100%. Meanwhile they could as well have charged the old premium, which is higher and take like fifty per cent of the risk and let other companies share 50%.”

[READ ALSO: Nigerian Millennials have figured where to invest their money]

While criticising practitioners who cut premium by half in order to take the entire business, the CEO affirmed that the sector would have witnessed tremendous growth with a higher premium rate if the cutthroat practice among operators had been tackled head on.

Self-inflicted harm: He revealed that many insurance firms are currently on a weak financial footing because of the outrageous premium discounts they granted to clients in the past. He was however, optimistic that the recapitalisation exercise, mandated by NAICOM, would offer insurance companies the timely lifeline they need at the moment and breathe the breath of life to the industry as a whole.

Insurance in Nigeria, NAICOM

Insurance in Nigeria

According to him, “Today, some brokers will still take quotes from companies that can no longer pay claims and when they get that rate, they go to the ones that can pay claims and tell them to participate. So if recapitalisation is the only way to address some of the ills, so be it.”

[READ MORE: Although Nigeria’s inflation “dropped” in June, Nigerians aren’t just feeling it]

The CEO said the industry needed to increase the level of public trust in the sector so that patronage could be guaranteed. He recommended that one of the ways to achieve this end was to train emerging professionals to execute insurance business the right way.

Millennials to the rescue: He went further to say that, “If I tell you that the issue of corporation is going to be resolved in my time, I am not sure. The issue remains that we can’t find a perfect market. But can it be improved? The answer is ‘yes.’ How do we address the gap in the level of trust that outsiders have in us? It is not for those of us who want to bow out of the industry soon.

It is a case for the young ones, the millennials that are organised. That is why we have been training the millennials to be innovative. When they come up with innovations, they might not produce immediate result but the result will come at the future and at that time, the millennials are the leaders of the industry.”

(READ FURTHER: NAICOM raises capital base for insurance firms by over 100%)

Jaiz bank

Olalekan is a certified media practitioner from the Nigerian Institute of Journalism (NIJ). In the era of media convergence, Olalekan is a valuable asset, with ability to curate and broadcast news. His zeal to write was developed out of passion to shape people’s thought and opinion; serving as a guideline for their daily lives. Contact for tips: [email protected]

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    Corporate Press Releases

    Applications across Nigeria, South Africa and Kenya now open for the 2021 Facebook Community Accelerator Program

    The selected leaders will spend five months learning from experts, coaches and a customised curriculum so they can strengthen their community.

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    Facebook

    Today, Facebook is inviting community leaders from Nigeria, South Africa and Kenya to apply for the 2021 Facebook Community Accelerator Program—a program that offers participants training, mentorship and up to $50,000 USD in funds to invest in an initiative that extends their community’s positive impact.

    The aim of the Community Accelerator is to help leaders of Facebook communities to harness the power of their community to turn ideas into action. The selected leaders will spend five months learning from experts, coaches and a customised curriculum so they can strengthen their community.

    Lessons include community identity foundations, leading action-oriented programmes and sustainability. Participants will also receive early access to new Facebook products aimed at helping communities better manage and activate their members.

    Plan an initiative

    Participants will identify an important initiative that will create a positive impact on the broader world and develop a plan to mobilise their community around their goal. Initiatives will be shared with potential partners, mentors and a panel of judges for the chance to be awarded funding and receive public recognition.

    Participants will then spend three months executing their initiatives. They will collaborate with advocates and leaders in the community space and work with the Facebook team to bring their ideas to life.

    Says Kiran Yoliswa, Partner Management Lead, Middle East and Africa Community Partnerships at Facebook: “Facebook communities and their leaders are helping to resolve social challenges, sharing knowledge and information, while connecting with others that share their interests or passion for a cause. We’ve seen so many incredible communities from across South Africa, Kenya and Nigeria using our platform to drive change and provide support and encouragement for thousands of people, we’re excited to offer their Facebook Community leaders this program to help amplify their impact even more.”

    How to apply

    Hotflex

    This program is open to communities that have a presence in Facebook Groups with leaders who are 18 years or older. Communities must have existed for over one year and must have a minimum size of 1,000 members. Applications open today, May 4 – 31, 2021.

    The Community Accelerator is part of our Facebook Community Leadership Program, a global initiative that invests in people building communities. Learn more and apply here.

    You can find out more about the 2020 Community Accelerator cohort and those who received additional funding here.

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    Business News

    NIN registration: 54 million Nigerians have now enrolled – Buhari

    12 million Nigerians were enrolled into the National Identity Database in the past 6 months.

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    President Muhammadu Buhari disclosed that the FG has enrolled 54 million Nigerians into the National Identity Database, citing that 12 million were enrolled in the past 6 months alone and that the final aim of the scheme is to secure Nigeria’s security infrastructure.

    President Buhari disclosed this in a statement on Thursday evening.

    What the President said about NIN enrollment

    “I am pleased with the success we are recording in the enrollment of persons into the National Identification Number (NIN) database. 54 million Nigerians have now enrolled; I am told over 12 million of these within the last six months. Our goal is total coverage.

    The National Identification Number (NIN) is the foundational digital ID for the country. It will cover one of the weaknesses in our security structure. We will be able to easily identify all Nigerians, including the crooks in our midst.”

    The President added that both legal residents and Nigerians are expected to obtain the NIN as it would be beneficial to government agencies to utilise resources efficiently.

    In case you missed it

    The Federal Government announced a further extension of the ongoing National Identification Number (NIN) registration and linkage with Subscriber Identity Module (SIM) exercises to a new deadline of June 30, 2021.

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