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By Henry Uche [email protected]
Nigeria may not be physically fighting the war with any other country but it cannot deny being submerged in socio-economic and political war over the past seven years. Given the inflation rate of about 20.52 percent; youth unemployment rate of about 42.5 per cent; underemployment of about 22.8 percent; exchange rate of over $1/N700; GDP of about $440.78billion; and Per Capita income of about $2,085, every rational human being would believe that the giant of Africa is indeed in a self inflicted war for survival.
In this interview with Daily Sun, Dr. Obinna Chilekezi, advised insurance operators to be circumspect and be guided against eventualities because whatever happens to other businesses affects the insurance industry.
Except
No doubt the Russian- Ukraine war has impacted significantly in the oil & gas among other sectors globally, and countries are repositioning themselves to withstand the pressure coming from whatever product & services Russia offers, how should insurance sector prepare themselves?
It’s true that Nigeria is not physically at war with any other country but we are bedevilled by socio-economic and political war over the past years. Over there, the physical destructions, social unrest, tension and anxiety would not allow businesses to thrive (though Putin seems to be very prepared) but here in Nigeria, we’re suffering from policy summersaults which has resulted in our current economic quagmire. So as business owners and operators in Russian, Ukraine and the rest of the world prepare themselves proactively, the same thing is expected of our insurance sector in Nigeria. Though we’re expecting a very significant shift (positive change) immediately after 2023 general elections from whoever becomes Nigeria’s next president, howbeit, for now, the sector under review should still prepare for the unexpected. You know the economy has been in transit from bad to worse and now worst from 2015 till date. So, they should be guided, as no one knows exactly what happens next.
Relationship between insurance and other businesses in a time like this
Insurance is needed naturally as a result of the existence of other businesses in the economy. In other words whatever has a impact on these other businesses will definitely affect the insurance sector. For a country like Ukraine for instance, the insurance business will be shut down. As most insurance policies can’t offer cover once there’s war.
Growth level
For most other countries the industry will negatively be affected by the slow down in the economy caused by the war. Looking at the Nigerian insurance industry and by extension that of Africa, it will not be out of place that the percentage of growth will be lower than that of the two previous years.
Nevertheless, it may not be too lower as could be expected in the advanced markets. The issue is not of regulation but purely that of business management. For the managers of the firms should put in measures to counter the economic challenges on their business.
Anything to worry about?
For Nigerian insurance Policyholders, there’s nothing much to worry about. We are not at war. Your policies on insurance are intact. Most of the operators have more assets to cushion the effects of the present economic realities on their business.
How should insurers be guide?
I can only say that at this time or moment, there’s need for them to watch their management expenses through cutting cost and doing real underwriting of proposed risks.
Do more people take insurance policies
Yes, insurers should expect surge in policy subscription from the public, however, I think this should be the time for proper pricing of risks before covers are granted.
Pension sector
The present pension regime is not insulated from both positive and negative effects of the economy. What this means is that the rate of growth of the funds retirement savings account will be affected too. There is nothing to worry much about. We should expect the growth to be slowed down too.
The economy at large
The truth is that there’s need to diversifying the economy. The present situation whereby everything is imported cannot help the country. As a person I believe that there’s need to ban some items in order to create some form of scarcity which could motivate local production of such items. Take for instance the temporary closure of the border which led to increase interest in rice production that was lost as a result of the removal of such restrictions. You imagine what would have been rice production if that policy was not cancelled. This is not novel as such as there has been similar developments in countries like China and India, coming home to be specific the banning of imported frozen chicken in Cameron.
