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Insurance: Flood may reduce premium payment – Efekoha



Eddie Efekoha is the Managing Director/Chief Executive Officer of Consolidated Hallmark Insurance Plc. He holds a Bachelor of Science degree in Insurance, and a Masters degree in Business Administration, both from the University of Lagos.

Eddie worked in various capacities at Everyman Insurance Brokers, Hogg Robinson Nigeria and Glanvill Enthoven & Co (Nig.) where he left as Executive Director (Technical) in 1997 to pioneer the effective take-off of Fountain Insurance Brokers Ltd., as its Managing Director/Chief Executive.

A Fellow of both the Chartered Insurance Institutes of London and Nigeria, Eddie has attended several local and international courses in both Insurance and Management. In this interview with Daily Sun, Efekoha, who was vice chairman/CEO of Consolidated Risk Insurers Plc., before his current appointment, fielded questions in areas bothering on the general performance of the company and prospects of the insurance industry in Nigeria.



Insurance industry in 2012 and prospects in 2013

The year 2012 actually started with a lot of hope, as we all thought the Federal Government transformation agenda, which identified several economic reforms, will spill over to insurance in terms of business generation. Government, as a major spender, could impact on our business if only they will execute the different projects and programmes and, of course, the different sectors of the economy, including insurance, will benefit.

We had thought that things would go upwards, but l still do not think that will happen, given that we are already in October, the tenth month in the year. I do not think that has happened, but suffice it to say that the industry has grown as we are still providing immediate service to the general economy as a stabilizer.

We have witnessed key events that should shape the industry. The first is the Dana Air crash. Secondly, we are currently experiencing what was thought could not happen in Nigeria…and that is flooding.

We have not identified Nigeria as a natural disaster zone as such, and most insurers will always look at flood as special risk, whereas this kind of flood is like one coming from a leaking overhead tank, affecting both the high and the low. Even President Goodluck Jonathan’s house in the village was not spared, which means it is not just my house or yours in the village or town that was flooded. This flood is no respecter of anything, and it is the situation we face today, which means that the risk is with us and we must take all measures to plan for it and to manage it effectively.

Fortunately, for our company, Consolidated Hallmark Insurance Plc., I will say that we are happy with where we are, having achieved a very modest growth. The key driver of our business from the start is our people – the staff and the board. We have continued to improve on the hosting of our annual general meetings by investing so much on the processes. Each year we try to bring forward the time we hold the AGM. Since 2007, we held the AGM in August, then July and this year, it was held before the first half of the year. As we move on, we will continue to improve on the time of the AGM.

The numbers have grown but not as we expected, because we are still under the weight of our past in terms of receivables in the industry, which has not helped anybody, under a constantly changing regulatory regime. As far as this is concerned, you will recall that the consolidation was done on the basis of allowing companies up to N400 million receivables as part of their shareholders’ fund. That is in determining the N3 billion shareholders’ funds that is the new capital. Underwriters were allowed N400 million on receivables, meaning that effectively what was on ground was N2.6 billion. By the time that was over, we came up with a regime that allowed receivables up to one year, being allowed in their accounts. Then we moved on shortly after, to have receivables classified into 90 days, 180 days, 270 days and 361 days. We are told that within 180 days, we may allow 10 to 15 per cent and, thereafter, 90, 100 and 180. Before now, you were allowed something and now, we are at the threshold of saying you are not even allowed anything again.

So all of these have taken place within a span of five years. You will appreciate therefore what impact that has on the financial reporting of various companies. All we have continued to do is to comply as we are in a regulated business. Fortunately, I do not think that we are in any serious breach of regulatory requirements in terms of returns.

We equally realised that this year, like every other year, we have greater stake to our stakeholders particularly the policy holders. Just recently, we were involved with Chevron fire. It might look small, but it’s something. We paid a claim of about N60 million to somebody just few months ago even though the major claim has not been concluded. And as we speak, we are about settling claims of about N180 million for a fire that happened in Kano.

For us as a company, we recognise that we are in business to pay claims and therefore we must operate and ensure we do not fail. When we do that, satisfied clients will recommend themselves and other people to us. So, it’s a business that is built on referrals such that existing clients will refer you when you have done this and we will continue to do that in the mist of changing environment.

Of course, you know we moved to our Head Office on Ikorodu Road this year from our Victoria Island Office, which now serves as our Victoria Island branch office. In that branch we have our energy and Gas risk. Our movement here has helped us, and that is why at short notice we can still call others and we meet. At Victoria Island when we have occasion to hold this kind of meeting we find out that one or two persons will be missing. So we have enjoyed being here. It has helped our productivity because man-hours that we used to spend on Lagos traffic, not to talk about the closure of Third Mainland Bridge have all reduced. Now some of us spend just 30 minutes to get to the office, which was formally taken an average of 2 to 2  hours. All of that has been helped by our coming to this present office at Ikorodu Road. But overall, I will say our numbers have made some upwards movements.

As at September, which is the end of third quarter, we exceeded what we paid in terms of claims in the whole of 2011. That means that by the time the year runs through, we must have paid out quite huge. Last year, we paid N512 million, and this year we have paid about N615 million as at September already. I have said this in other to buttress the fact that we value our customers. We have undertaken a sort of strategy session, which we regard as learning the environment and we will continue to learn by getting people to talk to us at the board and management levels. In the last three years, the board has always held annual retreat where we have consultants talk to us and there is usually that regular interface between the board and the staff in terms of resolutions from both sides.

We also realised that the first in our priority list is claims payment, but in doing that we ensure that underwriting must be very solid. All of these can only be achieved if you have the right people, so, we take clues from the UAC’s and Lever Brothers of this world. They have several CEOs, so, our people are empowered to that level. We have three regions because we subdivided the market into three. Truly, insurance is very challenging particularly in the light of very strong regulatory demands, but we thank God we are coping.

Flood threats, food production and insurance market

There is no gainsaying the obvious that our market will be threatened by these events. We have had this flooding incident and no doubt some of them have been insured. However, it depends on how long the flood remains with us. May be, insurance may not be taken up on them anymore or for a long time to come. Then you will expect that premium to the industry will reduce. As we speak, there are a lot of temporary camps for many of our brothers, sisters and friends in affected areas, and this is a major challenge for MDRI when we look at growing the retail market. Now, if these are the people we are focusing on, small peasant farmers and rural population and they are battling for survival, insurance will be the last thing that will be in their priority list.

MDRI might suffer some little setbacks because these people will need to be re established to get a decent accommodation and guarantee survival before insurance is looked into. By and large, I believe the flood will impact on the level of premium being expected into the industry.

Insurance training and the public

The industry is doing everything to create insurance awareness. We have PILA that has continued to do awareness programme for the young ones and they have sustained the programme for these four years. The programme continued to push insurance to children who are leaders of tomorrow. From the institute, the College of Insurance is about to take off, the Agency scheme is also on and we are encouraging more people to take up CIIN exams. If you go to the centers these days the number of participating candidates have been on the increase. At some point the institute has targeted 5, 000 new entrants, be it graduates or as agents, but we have not achieved that yet. However, it is important to set our targets and we will continue to work towards that.


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