Insurance sector pays more claims in 2016 than previous years —NIA boss

By Abdul Olalekan

The devaluation of Naira against the international currencies and its attendant effects have had a toll on insurance industry as the sector paid more claims in the current year than the previous years, Business 247 News Online learnt.

This, according to the Chairman, Nigerian Insurers Association (NIA), Mr. Eddie Efekoha, was because a dollar has risen to about 470 Naira in the black market, hence, leading to inflation on the price of goods and services, especially, with the country as an import-dependent nation.

He also attributed this increase to inflation and high interest rates that is having a multiplier effects on the prices of virtually every transaction across the federation.

To this end, he said the price of replacing insured properties has risen tremendously, in some cases, more than 100 per cent, even when policies were underwritten in the old prices.

This, he said, leads to a huge loss for insurers in compensating the claimants, noting that this has equally eaten deep into the little profit some underwriters made in the current year.

The most affected classes of insurance, he pointed out, are motor insurance, building insurance, medical insurance, among others.

To him, “We witnessed higher claims in 2016 than in 2015 and the reasons are obvious. As at December 2015, the price of dollar against Naira is 199, but today, it is 470. Most properties are insured in their old prices, but now, the building materials have increased, meaning, we are going to pay more, to reinstate a damaged building.

“The same goes for medical insurance as the price of most of the drugs have equally gone up as a result of volatility in exchange rates. Replacing a damaged vehicle will cost more than it cost a year ago, when the policy was undertaken.”

He, however, noted that the insurance industry may need to review the price of some policies taking into consideration the inflationary trend.

Earlier speaking on behalf of insurers, he disagreed with the Federal House of Representatives over its accusation that about N200 billion insurance fraud was committed in the process of insuring government assets, noting that the Adhoc Committee set up to investigate the matter gets its fact wrong.

He noted that association would have waited for the Committee to conclude its investigation before making its comments but that to date, so much damage has and is still being done to the image of insurance industry by some of the statements credited to the Chairman of the committee.

Some of the statements made by the committee, which are in their material facts, according to him, are inconsistent with known insurance market practice.

He appealed to the Committee to conclude its investigation and where necessary, request for clarification from the regulator, the National Insurance Commission (NAICOM) and market associations before making public statements that are capable of damaging the image of insurance industry.