Business News
Insurance Penetration: Coronation urges regulators to embrace tech
Coronation Research has urged NCC and CBN to use the existing technology platforms to boost the growth and acceptance of insurance in the country.
Coronation Research has urged the Nigerian Communications Commission (NCC) and Central Bank of Nigeria (CBN) to use the existing technology platforms to boost the growth and acceptance of insurance in the country.
The firm tasked the regulators to position the sector for radical growth, as it is important for the National Insurance Commission to partner counterparts in the telecommunication, banking sectors and apply the technology that transformed the duo to reach the industry’s potential.
Head, Coronation Research, Guy Czatoryski, who disclosed at the NSE insurance sector forum, expects NAICOM to consider the lessons learned in Asian markets, and also in West Africa, which shows how insurance can be rolled out to tens of millions of customers.
He said, “NAICOM can reach out to the 38.5 million bank depositors with Bank Verification Numbers through the CBN and the 172.9 million telecoms subscribers with the support of NCC. It won’t be a bad start for distributing insurance with Telcos.
“Nigeria has achieved great things in financial services. Pension Fund penetration is an example, with the total assets under management of its pension funds growing, in real terms, at 9.8% between 2008-2018 and taking the proportion of the population covered up to 4.3% and rising.”
[READ MORE: Niger Insurance to raise N15 billion as recapitalisation deadline looms]
According to him, insurance or microinsurance can be hand out for free as such will help overcome the initial objection people have to pay for something that they do not understand and may not trust as practised in other markets.
“In India, Bharti Airtel, a telecom company, offers free personal accident insurance to customers of its online payment bank, Airtel Payments Bank. The customer’s mobile number is his/her account number, cash withdrawals and deposits are possible through merchant partners, and an online debit card is available through a partnership with MasterCard. Customers receive free accident insurance cover.
“In Pakistan, U Microfinance Bank, owned by the Pakistan Telecommunications Corporations, entered into a partnership with MicroEnsure Pakistan to launch an insurance product for bank customers in 2018. Customers with a minimum level of deposits in their business current accounts were offered free life and permanent disability cover,” he added.
Appreciating Coronation for the insights, Chief Executive Officer, NSE, Oscar Onyema, also urged NAICOM to explore the opportunities across both banking and telecommunication industries.
He said, “The Nigerian Insurance industry has grown remarkably over the years, generating a Gross Premium Income (GPI) of ₦448.6 billion in 2018, reflecting a 12% growth from 2017. The industry also recorded an increase in its asset base by an estimated sum of ₦1.3 trillion as at December 31, 2018, reflecting a 17% Compound Annual Growth Rate over the last three years.”
[READ ALSO: Continental Reinsurance Plc suspended from trading shares on NSE]
According to the National Bureau of Statistics (NBS), Onyema added that the Insurance sector recorded a nominal growth rate of 6.69% and a real GDP growth rate of 3.96% in Q3 2019 from 4.48% in Q2 2019 and 1.03% in Q3 2018.
“Although this data indicates a positive outlook in the Nigerian insurance industry, the reality and headwinds faced by operators in the sector are quite formidable. Many licensed insurers are largely undercapitalized, thus limiting their ability to take on big-ticket in-country risks, as is often required in the oil & gas, marine and aviation sectors. 2As at Q3 2019, the insurance sector contributed less than 1% to the Gross Domestic Product (GDP) of Nigeria,” he added.
Coronavirus
Lagos to open churches, mosques from June 19, limits gatherings to 40% capacity
Religious bodies to open at a maximum of 40% of their capacity and we’ll be working with them as being expected by the Lagos State Safety Commission.
Lagos State government says religious gatherings would be allowed to reopen on June 21, 2020. This was disclosed by the State Governor, Babajide Sanwo-Olu on Thursday during a press briefing at Government House, Marina.
According to the Governor, mosques are to reopen from June 19 while churches are to begin services from June 21 and only Friday and Sunday services should be held for now, as other regular services, including night vigils, must be put on hold.
He said, “There will now be restricted openings of religious houses based on compliance that we have seen and reviewed with the Safety Commission.
“From 14 days time, precisely on the 19th of June for our Muslim worshippers and from the 21st of June for our Christian worshippers, we will be allowing all of our religious bodies to open at a maximum of 40% of their capacity and we’ll be working with them as being expected by the Lagos State Safety Commission.
“But we know that these places of worship have different sizes but even if your 40% capacity is really so large, you cannot have beyond 500 worshippers at once, and keeping that maximum 40% capacity is really important.
“We will be encouraging people to have more than one service and ensure that they keep their premises clean, disinfect before another round of worship can take place.
“We will also be advising that there should only be mandatory Fridays and Sunday services. All other night vigils and services must be put on hold for now until we review our current situation.
Sanwo-Olu added that the state will also be advising that persons below the age of 15 because of how well they walk around should be excused from the places of worship and citizens that are above the age of 65 should not be allowed into these places of worship.
Coronavirus
FG may lift ban on interstate movement on June 21
Interstate movement may resume on June 21.
The Federal Government may lift the ban placed on interstate movements on June 21, 2020.
This was disclosed by special adviser to President Muhammadu Buhari on new media, Bashir Ahmad on Thursday via his Twitter handle.
He stated, “Interstate movement may resume on June 21, the National Coordinator of the Presidential Task Force on COVID-19, Dr Dani Aliyu, gave the hint recently, as domestic flights expected to resume on June 21.”
READ ALSO: U.S dollar gains, America sanctions Chinese Airlines from flying into the U.S.
Interstate movement may resume on June 21, the National Coordinator of the Presidential Task Force on COVID-19, Dr. Sani Aliyu, gave the hint recently, as domestic flights expected to also resume on June 21.
— Bashir Ahmad (@BashirAhmaad) June 4, 2020
Meanwhile, the FG last Monday, June 1, 2020, announced a cautious advance into the second phase of the national response to COVID-19. As part of the measure in the new phase, the FG has announced the full reopening of the financial sector.
This was announced by the national coordinator of the presidential task force on COVID-19, Dr Aliyu Sani. He said that the banks will now be allowed to operate at normal working hours five days a week as against the restricted time of 2 or 3 pm that was announced during the first phase of the easing of lockdown.
READ ALSO: Osinbajo sets up committee on reopening of Nigerian economy, suspends loan deductions for states
The Presidential Task Force also gave the green light to hotels to reopen but must do so based on the guidelines rolled out by the National Centre for Disease Control (NCDC). They are to maintain non-pharmaceuticals intervention. However, gyms, cinemas, parks, nightclubs and bars are to still remain closed until further evaluation.
The restaurants, other than those in hotels must remain closed to eat-ins but are allowed to prioritize and continue to practice the takeaway measure that has been in place since the first phase.
Business News
The conundrum in the retail pricing of PMS
Considering the landing cost of petrol is largely influenced by the prices of crude oil in the international market, we think prospects of continued recovery in crude oil prices is likely to put upward pressure on the cost of importing petrol.
The decision of the Petroleum Products Pricing Regulatory Agency (PPPRA) to reduce the pump price of Premium Motor Spirit (PMS), also known as petrol, to N121.50 per litre from N123.50 per litre has been met with stiff resistance from oil marketing companies (OMCs). The Independent Petroleum Marketers Association of Nigeria (IPMAN) have also stated that it impossible for its members to sell petrol at the new price floor of N121.5 per litre.
We recall that on 18 March 2020, the Federal Government (FG) reduced the retail price of Premium Motor Spirit (PMS) by c.14% to N125/litre from N145/litre, following the global pandemic which led to an unprecedented decline in oil prices and by extension a reduction in the landing cost of petrol. Subsequently, the FG announced a further reduction to N123.50 which took effect on April 1, 2020. Earlier this month, the FG directed a reduction in the pump price of Premium Motor Spirit (PMS) for the third time to N121.50 per litre. We note that the adjustments in the retail price is in line with the directive from PPPRA on a monthly review of the pump price, depending on prevailing market realities.
READ MORE: The good, bad and ugly of low oil prices for Nigeria
In our view, considering the landing cost of petrol is largely influenced by the prices of crude oil in the international market, we think prospects of continued recovery in crude oil prices is likely to put upward pressure on the cost of importing petrol. With the gradual relaxation of lockdown measures by countries who are starting to reopen their economies alongside the historic production cuts of OPEC+ which took effect last month (a 9.7mb/d oil production cut for May and June), we think the risks to oil prices are tilted to the upside in the near term.
Since hitting a two-decade low of US$19.33 on 21 April when the retail price of petrol was pegged at N123.50, brent crude prices have gained c.105% to close at US$39.54 on 3 June. Against this backdrop, we expect that the retail price of petrol should rather be adjusted upwards to reflect current market realities. The current situation appears no different from historical trends where the FG becomes reluctant to effect an upward adjustment in the retail price of petrol during periods of rising crude prices. This has often resulted in the renewed payments of the age-long fuel subsidy. We also think oil marketing companies (OMCs) who have only recently begun to import petrol alongside the Nigerian National Petroleum Corporation (NNPC) due to more favourable pricing could halt importation once again if domestic retail prices become unfavourable.
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