Insurance operators across the country expect the industry to generate more premium, especially, from Marine and Aviation sectors in the coming months, through the new flexible forex regime of the Central Bank of Nigeria (CBN).
As the case in aviation and Marine sector, 70 to 75 per cent of risks are ceded abroad, meaning, premiums have to be paid to foreign insurers in dollars, while claims are also paid in dollars.
And because of scarcity of dollars in the system, most big conglomerates in these two sectors could not renew their insurances, hence, affecting profit generation from these avenues.
However, with the new forex regime, insurance operators believe normalcy will return to both sectors which will drive the demand for insurances, a development they said will enhance the profitability of underwriting companies in the country.
The Chairman, Nigeria Insurers Association (NIA), Mr. Godwin Wiggle, stated that operators understand that Nigerians are facing hard times, and insuring their assets has been a little bit difficult but he, however, felt that the new flexible regime will allow some manufacturing companies to access forex to import raw materials for their businesses, and that this will increase the level of productivity in virtually all sectors, hence, will rub-off on insurance industry.
According to him, “We are in a challenging time and the sector is not spared. But may be with the flexible forex regime, there will be an increased activities in marine insurances, because there will be more dollars in the system, so that people can import raw materials for their industries. This will increase economic activities in the long run.”
In the same vein, Deputy President, Chartered Insurance Institute of Nigeria (CIIN), Mrs. Funmi Babington-Ashaye, felt the scarcity of forex has affected virtually all manufacturing firms as they were unable to access dollars for importation of raw materials, while those who do so, purchased it at exorbitant rates, that makes such ventures unsustainable, leading to death of some firms in the process.
The Marine insurances, she said, suffered a huge set back, as operators were unable to mobilise premium from such critical sector, hoping a new dawn might have come in that direction, especially, with the latest CBN move.