A fresh directives to insurance companies for covering of risks arising from strikes, riot and civil commotion will soon be issued by the regulatory of insurance, National Insurance Commission, Naicom.
The Commissioner for Insurance, SundayThomas said this at a
Professionals Forum, hosted by the Chartered Insurance Institute of Nigeria in Abeokuta today.
Speaking on the development, the NAICOM Boss said the recent outbreak of protests and civil unrest across the country and the resultant losses had exposed the vulnerability of government, businesses and individuals to unforeseen events.
These incidents, according to him have further reinforced the value and necessity of the insurance industry.
He said risks arising from strikes, riot and civil commotion which were redundant in the past and which by competition are mostly offered free of charge must now be adequately rated as an important product for the survival of Nigerian businesses.
However, he lamented that “these incidents are likely to increase insurance claims, thereby exacerbating the already weakened liquidity and capability of insurance companies.”
The NAICOM boss said the incidents have further reinforced the need for proper underwriting to ensure insurers are able to settle corresponding claims obligations to cushion the effect of losses on Nigerian households and businesses.
He said, “It is pertinent to note that insurance coverage for Strike, Riot and Civil Commotion clauses, which were redundant in the past and which by competition are mostly offered free of charge must now be adequately rated as an important product for the survival of Nigerian businesses.
“The Commission will be issuing directives to ensure that underwriting is strengthened to appropriately rate and charge requisite premiums so that profitability can be guaranteed and claims are settled promptly without financial strain on the companies.
He noted that while most losses arising from the Coronavirus pandemic are not adequately covered by existing insurance policies, it had become obvious that current insurance product offerings are not adequate to respond to emergent risks and needs of the society.
Thomas said there is, therefore, the need for a review of conventional insurance products in order to upscale the value proposition of the Nigerian insurance industry.
“We cannot continue to ignore the impact of unforeseen events on individuals, businesses, and the insurance industry as a whole.
Thomas also said insurance should act as the platform to relaunch economic growth.
He said, “As Nigeria reals in the pain of the destruction and losses suffered this year, the Nigeria insurance industry must utilise the opportunity to lead in the quick recovery and restoration of the affected businesses and also showcase its role in reinforcing the economic resilience of individuals, businesses and the economy at large.”
He also linked the increased propensity for claims to the suddenness of the Covid-19 pandemic which imposed immense pressure on all businesses including insurance business.
He said claims could come from pressures faced by consumers in the form of reduced finance and business activities, lack of access to credit, expiration and wastage of perishable goods, temporary or permanent business closures and employee contract terminations, life threatening and death.
The CFI said the pandemic had curtailed the ability of the industry to sell insurance products which in turn reduced premium income because of the traditional in-person sales and marketing.