By Henry Uche, [email protected]
Insurance and risk experts have contended that the exodus of many companies especially the multinationals and the demise of some micro and small businesses in Nigeria, following the harsh economic climate, could have been significantly mitigated through effective insurance coverage.
These experts argue that irrespective of the nature of a business the insurance companies in Nigeria, like in other climes, are capable of underwriting a wide array of risk associated with the business they run.
Worthy of note is that, the over 54 insurance companies in Nigeria cover political risks, social risks, economic risks, demographic risks, climatic/ weather conditions risks, personal risks, risk associated with the act of nature like earthquake, flood, volcano eruption, individual/ personal risks, corporate risks, among others.
As a risk mitigating tool used to reduce impact of hazard, insurance is one of the backbones of any economy. Without a strong insurance system, there will never be a thriving economy. From Nigeria point of view, many organizations are struggling because they were unable to explore the essence for insurance. If insurance companies, which act as a defense and a restorer of life to others businesses, covering the aforementioned diverse risks, one wonders why businesses are packing up in droves and leaving the shores of Nigeria. For instance, there are insurance products designed to cover the negative effects of government bad policies, decisions and programmes.
Risk managers have reiterated that socioe-conomic and political environment all over the world would remain unpredictable given the changes in climate and a global warming, but the ability of individuals and corporate organizations to prepare themselves for any eventuality would determine the long-run survival of such corporate bodies.
Economists and administrative professionals agree that Nigeria’s current recession is as a result of leadership failure from the side political leaders across the three tiers of government. This is evidently indisputable since the decisions, plans, policies and programmes as well as the actions and inactions of the government affect the economic well-being of the common man including business organizations and individuals.
Picking various insurance covers fit for purpose to avert doomsday, would have been the way forward for individuals and businesses.
For instance, the current flood ravaging different communities on a yearly basis is enough warning for citizens living in flood – prone areas to be proactive and make a hey while the sun shines. Unfortunately, many Nigerians still hold the old negative view about insurance business in Nigeria, some would rather be caught up in the web of flood than to transfer their risks to insurers. However, to change this sad narrative, insurance companies are rewriting the ugly story in recent times by paying claims promptly to prove their critics wrong. Just last week, the insurance regulator- the National Insurance Commission (NAICOM) gave a matching order to African Alliance Insurance Plc, to resolve and ensure settlement of outstanding claims to its policyholders with genuine claims.
This was following increased complaints by annuitants and insurance claimants against African Alliance in respect of the company’s delay and/or inability to fulfill its claims obligations.
More so, NAICOM directed the Board of Directors of the company to immediately submit a turnaround plan for addressing the challenges currently faced by the company which necessitated putting the company under the Commission’s Regulatory Order. NAICOM said it would not hesitate to take action if they (African Alliance) fail to address the issues within the timeline given. This is an effort put in by the regulator to boost the confidence of publics and attract more people into the insurance net.
In a telephone interview with an insurance teacher, Dr. Abass Olufemi, he said it is high time Nigerians saw the essence of insurance to mankind without being persuaded.
According to him, many organisations are struggling because they failed to explore insurance space. To some, they decided to ignore insurance while some others were totally ignorant of the essence of insurance to individuals, businesses and the economy at large.
“We can not do without insurance. Basically, insurance can be seen a tool for fund mobilization and savings. For instance, because insurance has a pool of funds, it can be deployed for the growth of other sectors by resource managers who knows their onions in the economy”
Olufemi who is the Head of Insurance Department, Lagos State University, added that aside fund mobilization, insurance also helps in job creation. For instance, young people can become insurance agents and brokers, and build a career therein.
The new NAICOM boss, Mr lusegun Omosehin, recently vowed to increase insurance agents across Nigeria from 50,000 to 300,000, that is a another way of creating jobs.
The insurance teacher added that “If people and corporate organizations would embrace insurance, socioeconomic and political risks which have impact in their lives and businesses would have been taken care of. Most individuals and corporate organizations standing today have one form of insurance or the other, and such people have peace of mind because they have little or nothing to worry about. Take for instance the current flood, those with insurance cover have nothing to fear. Aside that, insurance, insurance helps in funds mobilization which we urge the regulator to deploy judiciously for investment. Businesses should prioritize insurance because to remain afloat, and bounce back to life, it’s the right thing to do,” he explained.