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Integration of West African insurance market imperative – NAICOM

By on August 5, 2013

The Commissioner for Insurance, Mr. Fola Daniel has called for integration of the insurance sector in the West African sub region and Guinea-Conakry, saying that the move is not an option but an imperative.

Daniel made the call at the inaugural meeting for the integration of the insurance sector in the West Africa Insurance Companies’ Association (WAICA) member states and Guinea held at the ECOWAS Secretariat in Abuja recently.

Daniel said that insurance is a key driver in the economies of countries and the West Africa sub-region was not expected to be an exception; however, the insurance sector has remained a third level player in the financial services sector of West African States.

According to him, while the other components of the financial services sector in the sub-region have all moved on and firmed up processes for their integration, it is regrettable that same cannot be said about the insurance sector.

He said, “Let me also quickly restate the well-known fact that insurance is not very popular in our sub-region for various reasons amongst which are; low level of financial literacy, lack of adequate awareness of insurance mechanism and poor perception of the industry.

“However, there is an increasing cross-border insurance practice in the sub-region in tandem with our collective quest for integration. The insurance regulatory bodies in the sub-region are therefore poised to engage in cross-border collaboration and exchange of information and data. This is to ensure that insurance practice engenders trust and acceptance in our sub-region through enforcement of rules and regulations,” Daniel said.

Recall that Managing Director of Riskguard-Africa Nigeria Limited, Mr. Yemi Soladoye said that the future and solidity of the Nigerian insurance industry can only come from market expansion.

Soladoye said that the concentration on premium growth, as against market expansion by insurance operators is inimical to growth.

He said operators often focus on how to raise their yearly premium, abandoning the need to create expansion through good services and people tailored products.

He said, “All the operators want is to ensure that their premium for this year is higher than what it was last year, and they are ready to spend anything to achieve that. If their market position last year was number six and they move to number five this year, their board would applaud their effort, not minding the cost.

“The companies cost of doing business is indeed very high; the claims ratio is quite low. These are pointers to the fact that insurance companies need something new and better. “The issue of unhealthy competition will be getting worse until they look for better, cost effective and non-volatile distribution channel. This can be achieved by bankassurance which is insurers having collaboration with banks to grow their retail businesses. It also means engaging in strategic alliances with organisations, like Shoprite, Megaplaza and others,” Soladoye said.

He also urged operators to initiate collaboration with cooperative societies and other relevant bodies to deepen insurance penetration.