Don't Miss


Home   >   Business   >   Industries   >   Insurance   >   Insurers reduce cover in troubled states

Insurers reduce cover in troubled states

By on July 3, 2014

Underwriting firms are gradually reducing insurance cover in the states in the North where scores of people die and valuable property is lost almost daily as a result of Boko Haram insurgency, investigation has revealed.

Despite the introduction of terrorism insurance occasioned by the high risks in the region, the underwriters are worried that it is increasingly becoming difficult for them to assess the risks in the volatile states and get across to those in need of the covers.

In fact, many of the firms are closing their branches in Borno, Yobe and Adamawa states, where state of emergency had been in force since May 14, 2013 because of the increasing risks and difficulty of doing business in the region.

Figures from the underwriters’ records obtained on Tuesday also showed that there had been rising claims, especially the life insurance portfolio, from the region.

It was learnt that while some companies were still operating in some states in the North, they had been careful not to include large covers of risks resulting from the insurgence.

The insurers, however, said that they had not been charging discriminatory premium on some assets such as motor vehicles in the troubled zone, even though their risk profiles are higher than other parts of the country.

The Managing Director, Sovereign Trust Insurance Plc, Mr. Wale Onaolapo, said, “Most of the companies are not doing terrorism insurance because it is an excluded type of peril; but insurance companies will be compelled to pay for the cars destroyed that are covered with comprehensive insurance.”

The Managing Director, African Alliance Insurance Plc, Mr. Alphonse Okpor, also said the huge loss of lives in those areas was a source of concern to insurance firms operating in the area.

For instance, he noted that the death of some security personnel covered with insurance policies had been increasing the claims profile of the insurance firms.

For now, he said that the underwriters were not keen about opening offices in the affected states because of the security challenges.

The Managing Director, Anchor Insurance Company Limited, Mr. Ademayowa Adeduro, said that it was very challenging for the insurance branches in those states to do underwriting business.

Despite the huge losses recorded in those areas, he also said that the underwriters were not charging discriminatory premium rates on cover.

He said that some companies were skeptical about providing cover in the region because of the huge risk profile.

While speaking on the foreign reinsurers approach on such risk, Adeduro said that foreign reinsurers would want to ensure that proper risk assessment was done in a particular area, based on the claims experience recorded over time before giving a treaty.

“They may impose restriction such as removing terrorism from the North, when reinsurers have records of high loss in a particular area over time, they may exclude the risk from that area,” he said.

 

[Punch]