Sunday, 30 October 2011

We need insurance more now that theeconomy is down– Uranta

The Nigerian insurance industry is
grappling with a lot of challenges,
chief among which is lack of
awareness among the populace. This,
coupled with the downturn in the
economy has suffocated the industry
leading to low profitability among
other things. But Managing Director
and Chief Executive Officer of Niger
Insurance Plc, Dr. Justus Uranta who
is the Chief Executive Officer for this
week believes that the economy is not
doing particularly well adding that the
industry can do a lot better than it is
doing now.
“If activities in the economy hit a low
side, every company must be affected. If it is
on the up side, we take advantage of it. So
right now that the global economy is
suffering, every economy, every practicing
going concern must be affected, depending
on your activity anyway,” Uranta said.
Insurance industry in the Nigerian economy
The economy as we know today, I am sure you
can lecture me, is not doing particularly well.
We can do a lot better than we are doing now.
Therefore, every player in this economy must
be affected. If the activities of the economy
hit a low side, every company must be
affected. If it is in the up side, we take
advantage of it. So right now that the global
economy is suffering, every economy, every
practicing going concern must be affected
depending on your activity anyway. Some
done less affected than others.
That is the way I put it. In my company here,
there was a time when our price was between
N9 to N10 per share. It was not the 50 kobo
you are seeing today. The same thing applies
to all other aspects of the economy. If it is
good, you go with it, if it is bad you go with it.
However, when you come to insurance, the
company on its own may not be doing well,
but the low level of activities in any country
brings out the necessity of insurance. I say so
because I always like to use very costly
So at this time of downturn in the economy,
that is when insurance is very necessary
because a lost of asset is double jeopardy for
the owner. You lost it; you have difficulty in
replacing it with your own funds. But if you
have insurance, the premium you pay will take
care of it and then bring you back to the
same position you were before the loss and
under the present economic crunch you will be
better of it.
Plan to beat competition and be on top
Competition is not bad itself. In fact, if
anything is a big booster, users will be
affected. That is practitioners and better
still, the end users because when there is
competition among productive sectors, they
tend to come out with excellent products, they
tend to come out with competitive prices, so
that they can sell. So at the end of the day,
the end users are better off for it. However,
under the circumstances we find ourselves, the
issue of competition, challenges us to think of
better ways of serving the public, you have
known. You need to have an edge over your
competitors to be able to remain in business.
So we look at our service delivery, we look at
how we can improve on it; and in the last two
years, in response to environmental change,
we have introduced a special agenda in this
company called the “NEST” agenda. It is an
acronym for, Niger Enterprise Strategy
This agenda is created to answer this
question, because as competiton gets stiffer,
you must survive and how do you survive? You
must strategize, you must introduce new
tactics, new strategy to beat your competitors.
So we look at how best we can serve the public
in terms of turnaround time. We look at our
manpower; we try to train people so that they
can be a lot more efficient and improve on
their skills and experience. We also look at
the facility we have, we are trying to improve
on them so that collectively they can help to
improve that service delivery.
And then, in terms of our claim
administration, we always controllably review
it so that we reduce the time it takes to settle a
particular claim because when your client is
aggrieved, sad by way of an occurrence of an
accident, the only language he wants to hear
is to make him happy. And how do you make
him happy, it is through claim settlement. So
all these put together is what we controllably
drive under the NEST Agenda to make sure
that they remain afloat. And our target of
course as any other serious minded company
is to be the number one. And the number one
position is very tasking. In fact it is as
difficult to get there as it is to remain there.
Relationship of Niger Insurance with
Those who think Niger Insurance belongs to
government should not be blamed. Even the
name itself is synonymous to Nigeria
(Niger), a river flowing from all the way,
north down to the south. Seriously speaking,
anybody that thinks that Niger Insurance is
government owned is not entirely wrong
because at a point back in the sixties, during
the introduction of indigenization decrees,
the company itself was taken over by the FG
from the real owners in England and they
ran it for a while and passed it on to their
baby company, NICON Insurance. That one
also was commercialized. There after it
became privatized; trading today on the floor
of the Nigerian Stock Exchange (NSE)
trading on shares. So we are fully privatized
now as supposed to what it used to be in the
past when government has some interests.
Whether kidnapping, bombing, flooding are
Insurance is about the unexpected. It is about
fortuity, something you did not expect to
happen but happens. It is not something you
expect. If I know that this filling station will
go on fire, and the owner wants insurance,
why should I give him, considering that the
money he will pay is always very
disproportionate as supposed to the liability,
which I am admitting? I mean that the entire
value of the filling station might be N200
million and ask him to pay .2% of that. So
you know the proportion of 2%.
You will be paying 2% of N200 million, 1% of
it will be N2 million, .2% of it may be N400,
000 in exchange for N100 million. No sane
person can do that and expect that in the
next 3 hours he will be overburdened by
financial outlay of close to N100 million. So,
not every risk is insurable. However, as far as
its fortuitousness is concerned, there are risks
which ordinarily you can see on the face of it,
it looks as uninsurable but can also be insured.
In fact the bottom line there is that it must be
unexpected. The damage or result of the peril
must be unexpected. If you come now and tell
me that you are going to Onitsha and will hit
your car when you get to Asaba then I know
that you are prepared for that therefore that
is not fortuitous.
That means that I cannot insure it. Perhaps
I decide, and ask you what is the value of your
car and you said N10 million and I said okay
drop N10.2 million then I can insure it. In
that sense, every risk is insurable provided you
are able to pay. But, however, narrowing it
down to what I think you have in mind,
terrorism and all that; terrorism, before it is
identified, you want to insure it, you will find
out everything about it, frequency of
terrorism in that area, the magnitude and all
that, and then we can give you a charge.
If you can pay, it becomes an insurable thing.
Just like flooding as well. Flood is not
exclusion in its entirety; just that it must
happen accidentally just like that. So if I
know that this area is a flood prone area, that
the next rainy season or the next rain that
comes, it must be flooded and there will be
damages again, it is not fortuitous. But when
you don’t expect it and flood comes’ here and
sweep the whole place, the flood there is
accidental and you can afford to insure that.
Enforcing compulsory insurance
Yes, we have other compulsory insurances in
place right from way back before 1930. There
are the motor insurances. So now that the
government is, through the National
Insurance Commission (NAICOM) is
considering other areas; from experience
anyway because I want to sincerely talk about
building in the course of erection that you
and I know the frequency of its collapse here
and there in the country. I think that
occasioned the necessity for government to
insist that, such buildings in course of
erection, buildings over two floors and so on
that are for public use must be insured. It is
for the benefit of the users more than for the
owners actually. So it is enforceable.
So what government through NAICOM is
doing now is to sensitize the public about the
need to have some of these aspects of our lives
compulsorily covered by way of insurance.
Thereafter I think they will need a lot of
other factors like legislation, to give it a
backing and then further sensitization so
that through legislation there will be statutory
penalties. The law enforcement agencies will
be involved to go round where they cannot
find any insurance on such property that is
so designated, then the owner will be penalized
or compelled to carry that insurance.
Improving on the price of insurance stocks on
the NSE
You are narrowing down to insurance but as
you can see, crash in the price affected every
sphere of the economy locally and globally.
This is a peculiar situation we found ourselves
in now. In the past if particular quoted
company finds its shares dropping, a little
research can reveal a number of reasons why
that is happening and then they will be in the
position to stabilize it and find a way to make
it move up again by certain activities. You
have first of all to tell the investing public
what program you have as far as the
company is concerned to encourage them that
this going concern is on the verge of doing
even better. So by so doing, the shareholders
will be encouraged to transact on your shares.
What we have today is a global meltdown.
You can see that out of over twenty- ever
companies, insurance companies that were
quoted, not more than three have their prices
above N1, the rest of us are cashed to the
minimum of 50 kobo.
For example now Niger is going into right
issues. We are going to raise huge money to
plough back and improve on our shareholders
money and other provisioning. If the
investing public hears that, it is positive
information that will confirm to them that
we are doing something that will further
sustain the license of this company. So such
efforts you expect baring every other short
comings like investor fatigue because as we
speak now people have little or no confidence
in the stock market. So no matter the amount
of noise you make, they will not believe you
until perhaps they see things happening.
NAICOM regulation
That question is extremely subjective.
Regulation itself is a very difficult challenge.
Let me digress a bit. You can see what is going
on between the CBN and the banks. If you
are in Sanusi’s shoes, you don’t know what
you would have done in this dispensation. I
don’t know how you feel? But having said
that, I will want to also join forces in
commending NAICOM. The past
commissioner before the current one had a lot
of knocks from the market. This market is
such that we try most of the times to tell the
truth especially about our operations.
This young man is very straight forward. He
was part of us and by virtue of his age, at the
expiration of his tenure, he will come back to
the industry. So he appreciates that position
and is using that to his advantage in the
sense that he does not see us as the leg. He
sees some kind of collaboration before the
regulated and the regulator and that is a
better approach, shortly after the opening of
the NAICOM Headquarters in Abuja, the
Commissioner had the course to call all the
trainees to a meeting and there and then he
was bold enough to tell us that, this time, it
will be more different from what it used to be
in the past.
We have to collaborate more, we have to work
towards solving problems, because it is
common sense that if you are a regulator and
you are too strict to the letter and you end up
killing all the companies you are to regulate,
haven’t you killed yourself. There is nothing
like that. In that extent, we appreciate the
style of the current commissioner and his
team. We only but wish them better luck and
also assure them of our cooperation.
Areas needing attention
Well thank you. What I want to say is like
repenting myself. It is what they are already
doing. They are a listening set of supervisors
and over the years and up till now that we are
speaking, they always try to provide a forum
for interaction between themselves and the
regulated. We have regular meetings, given
which times people bare their minds and they
listen. So in terms of what they are doing, I
can say that the industry is quite happy with
them. This is because the bottom line is that
you have to understand whom you are
regulating. The moment you understand
whom you are regulating, you understand
their problems, their predicament, their
challenges, then you will be able to be proactive
in terms of regulating them and by way of
appeasing their problems and probably
providing solution to make sure they remain
in business..
Relationship between NAICOM and NIA,
In this sense we cannot be talking about
superior regulator here. We shall be talking
about practitioners that are in senior activities
that are doing the same thing. Underwriters
have complete different functions. They are
the actual risk bearers. By underwriters I
mean direct insurance companies; then the
brokers (NCRIB) who have all brokers under
them. They are the intermediaries. They
don’t bear risks; they introduce clients and
businesses to underwriter. So their roles are
very clear than the adjusters. It is not until a
claim occurs or until you want to insure some
huge assets that you bring them in to look at
what is happening. We also have assessors.
Their role is also different. All these are
distinct roles that do not make room for any
clash. Perhaps the only one that you may
look at that may suggest some aspects of
clash but there is actually none, I can assure
you, is NIA and CIIN. But I can quickly tell
you they have different roles. Nigerian
Insurance Association is the umbrella body for
all insurance practitioners; and Chattered
Insurance Institute of Nigeria are particularly
made for academic development, training
and academic development so you can see
there is no clash. That is why out there in the
market, you can’t hear us clashing. The worst
disagreement we have is may be to percentage
commission which is also statutory. It is there,
laid down. So if you are doing motor, the
percentage is there for your commission and
so on and so forth. Even in the loss adjusting
aspects too, it is tariff based so you have a
value, you have this, you apply the tariff and
you get your figure.
Encouragement of rate cutting
We cannot encourage rate cutting. The issue
of rate cutting I want to believe is for new
companies, for new entrants who have not
been able to build any base for themselves;
asset base, customer cliental base and stuffs
like that. It is not with a company that is 50
years old. We have been tested over time, tried
and tested like they said and found to be solid
and reliable. So our customers hardly leave us.
In fact most of our customers are our
marketers that recommend us to other
customers to come to us. So we don’t
encourage rate cutting. In fact we are known
in the industry as being ethical. You will not
be able to meet your claims obligation so why
cut rates? When the claim comes, are you
going to tell your customer that he did not
pay adequate premium; that is why you
cannot settle the claim?
We give discount where necessary depending
on how you have been handling your assets.
This is because when you charge very low and
ridiculous rate, you will not be able to
accumulate the funds early enough to be able
to meet a claim obligation on course. So you
have to fail in your ability to pay claims and
that in itself rubs us negatively in our images.
Elimination of brokers
Well, I am happy you said that shareholders
called for the elimination of brokers because
of controversy that arise in the course of
settling cost of business called premium.
Remember that shareholders will not be
pushing us because no professional will
support the elimination of middlemen. I want
to use the middlemen now for us to
understand the role of brokers. You see, there
are middlemen in so many businesses.
Ordinary renting of house, you have
middlemen. Is it possible to eliminate agents?
So, in our own business, brokers have very
crucial role to play.
They are also professionals like us and
qualified as we are and are equally
experienced. What they do is to profess that
they know it all. They can introduce to you a
client that is very reliable that cannot
disappoint you especially at times of meeting
your claims obligation. You cannot dismiss
the fact that in every ten there must be a
Judas. So if one or two brokers are not doing
the right thing that is not enough to call for
their elimination. And one of the private
practices we do is broking business. So any
chief executive of insurance company, top
ranking person by the time he retires, he
resorts to broking, so there is no way you can
eliminate the brokers because they have very
important roles to play.
Motivations for your workers
Job stability. If you look over there, you see our
mission statement. We are working with well
motivated employees. We are using the high
level information technology (IT) platform
to ensure that we provide value for our
shareholders. So as far as Niger Insurance
staffers are concerned, they are enjoying one
very key thing in employment and that is job
stability. I am sure as journalists, you cannot
remember the last time you heard of staff-
management problems in this company.
What does that tell you, that at the least of
average, staff is serving and we continually
strive to see that they get their times’ worth
for being there with us. No!
We don’t joke with staff welfare. Of course
when times are hard, the funds may not be
available, we explain to them. Of course that
was the reason why I had to stay back a little
before coming to join you here. It was the
same staff problem I was addressing. So we
take staff matters very seriously because we
want to work with highly motivated employees
because it is only such caliber of staff that
can give you the best in terms of meeting
efficient customer satisfaction and service
delivery. We provide working tools; those who
are entitled to cars, they get cars, those who
are entitled to every other working tools,
training of course; training and retraining is
one of the fundamental aspects of this
We insist on human capital development and
expose our staff to as much training as we
can. We send staff to all over the world, to
America, Britain and Africa especially South
Africa to expose them the more and as we
speak now, we have about five staff in West
African Insurance Institute, the one we call
WAII in Gambia, of which my humble self
happens to be the Vice Chairman. And we also
take advantage of that because we are one of
the companies that send the highest number
of staff to that place for their one year
programme in insurance.
South Africa really leading Africa in
It is not exaggeration at all. I don’t know the
last time you visited South Africa because that
may have accounted for this question. This is
because if you have ever been there, you will
know that no doubt they have facilities well
ahead of us. The reason is very obvious. Let
me be a very bit funny. We were in a hurry to
drive our own colonial masters away, back in
the 1960s. They only got their independence
when Mandela was released in the 1990s. So,
their own Colonial Masters were there 30 years
after we have sent our own packing helping to
prepare ground for them, providing all the
facilities, replicating what we have in the
developed world. And going to there you don’t
need anybody to tell you. The moment you
land in any of their airports you begin to have
a very different feel.
In fact there is no great difference between
London in terms of developments and some
parts of South Africa. The only different is
that probably you see more black people/heads
than whites. Otherwise even as we speak today
the whites are still somehow on the driver’s
seat. The black guys can control the political
aspects of it but the nitty-gritty of the
economy is still in the hands of the whites.
And that is why we go there to borrow what
they are doing.
Why Insurance companies are not paying
I blame the inability of insurance companies
not paying dividends as expected to both the
individual companies and the stocks on the
exchange not doing well. However, one
precedes the other. There has to be an
encouraging environment first and foremost
for the economy and all its players to strive.
Then you can now come back home, the
management of these companies to take
advantage of this flourishing environment.
If the environment is rough and unfriendly,
there is hardly any serious headway any
individual company can make. They can
make progress but the rate will be very slow.
Africa-Re as 40th in the world, the
First and foremost the fact that Africa-Re is
headquartered in Nigeria is one big advantage
for us. But let me quickly remind you that it
is a sub-regional outfit. It is not a Nigerian
company. They are only headquartered in
Nigeria so their operations go beyond the
shores of Nigeria. They operate globally as a
very solid financially based reinsurance
company. They accept businesses from
Nigeria, the West Coast, Africa and any part
of the world.
And I can go to the best securities in the world
including Africa Re. So it is a good sign at
least they are in this clime and they are doing
well. For me as a practitioner, I am happy
that at least thy can meet my claims
obligation if and when they occur. The same
thing applies to every other CEO both in
Nigeria and abroad. So I like to commend
them to keep up the good works they are doing
and give good services in consonance with
their level of improvement.

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