Group Executive Director, Royal Exchange Plc, Alhaji Auwalu Muktari, speaks with NIKE POPOOLA on oil and gas insurance and risk management in the country
Has there been any improvement in the level of insurance awareness in the country?
The level of awareness is still very low. Considering a country of over 140 million people, you cannot talk about 10 million people taking one insurance policy or the other, under both the corporate and retail products.
Part of the vision of Royal Exchange now is to raise awareness all over the country. We want to be visible all over the country so that the common man and those that have not even gone to school will know what insurance is all about. We are currently doing radio programmes on insurance to enlighten people about insurance. We are introducing the mobile phones to develop insurance. We are having alliances with the GSM operators to create more awareness on insurance.
What is responsible for the increase in claims in the industry?
There are so many things that lead to increase in claims. There is the mortality rate in the environment; insecurity in the country, lack of power generation where everybody has to use generator. Claims differ from company to company, depending on the policy that is underwritten. Some firms may tell you they are recording a lot of crazy claims, some may tell you the claim is on a downturn, so it depends on the perception of company. For Royal Exchange, it’s neither on the increase nor on the decline; but we are able to keep to our promises; we settle our claims within 48 hours of claims documentations. All insurance companies are in the business to settle claims so we are not thinking or running away from claims. When there are genuine claims, we are ready to look at them and settle them objectively, so that we can win the confidence of our clients.
Has the introduction of guidelines on oil and gas insurance improved local participation?
There has been an increase in oil and gas participation following the enactment of the oil and gas content. The regulators are pursuing the full compliance of that bill, and so the local market must be fully saturated before any is ceded abroad. Also, the other people who are into oil and gas businesses are mandated to insure them. Generally, it has been on the increase within the insurance market in Nigeria, and it will continue to increase. But there is the need to build capacity within the industry. The capacity is not enough now to take all businesses within the oil and gas; we are calling for alliances within the industry so that we can improve the capacity instead of sending most of these businesses to other countries so that we can accommodate all our risks within the Nigerian insurance industry.
Are insurance firms selling more compulsory insurance policies?
We are selling these products and each insurance company has ways it is selling these products. Awareness is still very low; some people are still not aware of the need for them to insure their buildings. The economic environment in which we relate is also very harsh; people cannot afford three square meals. But with the branding Royal Exchange is doing, the publicity we are doing, we are getting to the root of the masses. We are doing radio programme to educate the masses. The National Insurance Commission is also campaigning to increase awareness. I think with time, everybody will know better and it will improve.
What are the benefits in these policies?
If you insure your house, you are covering your house against loss of damage by fire and destruction of different construction losses. Loss from strike, riots can also be extended. If there is any damage, you stand to get covered. Climate change is really causing a lot of issues such as environmental pollution, typhoons and flooding. That is why the need for you to insure your house and properties against such perils is important. If any loss occurs, the insurance company will compensate and take you back to nearly the position you were before the loss. There are cases of collapsed buildings in Lagos and some parts of the country, and all over the world. It is only in Nigeria when those buildings collapse, there is no insurance. In other parts of the world, there is insurance. The government has made it compulsory for all public buildings to be insured. In the case of third party damage, it is not for even you to recover your property, but for the third party that may be affected.
What is the impact of no premium no cover regime?
We thank NAICOM for coming out with this. It is tough for the industry but it is a welcome development. For any policy that is made, it is for the interest of the entire insurance industry. For Royal Exchange, it is a welcome development and at the end of the day, it is in the interest of the entire insurance industry. If we continue giving covers for free or on credit, at the end of the day, you will keep pilling up debts in your book, and it can lead to the collapse of insurance industry. With this development, we are heading for a bigger, better, and recognised industry, not only in Nigeria, but Africa in general.
Has the policy in anyway reduced businesses underwritten?
It has not for now; but you cannot book businesses on credit, it has to be as when due. The only thing we are experiencing today is if a client is supposed to pay you now, but he is unable to pay in full premium, you can agree to “prorated covers”; you give him a cover for three months, he pays for three month. Before the expiration of the three months, he will pay you the remaining premium and you can extend the cover. Unlike before when he had not been able to pay you in full and you put the figure in your book, expecting him to pay you. This is not a clean book because if you are carrying debt in your book and you can’t get the money, it is going to be a problem for the industry.
How should people mitigate emerging risks?
In the world today, there is climate change; the climate change has come to stay. The way we see rain today is not the way it used to be; flood is not the way it used to be. There is security problem. Life is all about risks. I urge the Nigerian populace to be risks conscious, improve the level of search for risks, identify risks within the environment and identify solutions to them. With this, people will now be risk conscious and they will come about mitigating those risks as they arise. Insurance is one of the ways to mitigate expected risks. Nigerians should accept insurance as a means of managing risks and protection. The insurance industry is committed to improving its service delivery.
What is Royal Exchange doing to increase insurance development?
We have been focusing on improving the visibility of the company; we are looking into re-branding of the company, and repositioning it in line with the reality of the current vision of the board of directors. The expectation is that Royal Exchange should take over the leadership in all respects of the insurance industry in the next three years – that is between 2015 and 2016. We should take over the leadership in terms of premium income, quality service delivery, branding and visibility activities, teaming up with the regulators and the Nigerian Insurers Association in achieving the marketing milestone by becoming accessible to the grass root in terms of the provision of insurance services.
What is your attitude to product development?
To get to the root of mass retail end, you must have a robust retail policy on ground. In line with the vision, we have recently employed an expert, who is able to fine- tune the retail programme of the group. Our retail products are focused, most especially on the general and life insurance and health firm of our company. We are focusing on recruiting from 250 to 1,000 agents between now and 2015, so that we can be in all the nooks and crannies of this country, providing effective retail services. We will help the people to know the products we sell and at the same time, the type of services that we can give to the masses. Also, we are looking at selling our products through the e-platform and the software.
Ask the expert
Do I have a pension right? I enlisted as a Cadet Assistant Superintendent of Police in the Nigeria Police Force in 1971. In 1979, I withdrew my service to join Nigerian Breweries. Do I have any right to pension after nine years of service? I’m now 72 years of age? Akinsanya.
The condition of service in pre-1992 states that one becomes entitled to pension right at 45 years after a minimum of 10 years of active service while gratuity entitlement is after five years. Therefore, putting in nine years of service from 1971 to 1979 does not qualify you for pension under the old scheme, which was the scheme on which you retired.
I left paid employment in 2006 and I have records of the Nigerian Providence Fund and NSTIF; at what age can I collect it? Lawal.
You retired under the old scheme also known as Pay-As-You-Go. To receive your entitlements depends on the conditions of service offered by your last employer. However, to qualify for pensions under the NSTIF scheme, one must be 60 years of age and must have contributed for minimum of 120 months.
My pension ID is ……, I retired from Department of Defence Civil Servant in Ordinance Deport Army Yaba Lagos . I went for the general screening in Abuja 2007 and was referred to my state in Lokoja but up till this day, I have not received my pension since 2007. I have done the screening twice. Please, how can I lay my complaint for verification? Omale
General screening exercise for such cases was conducted by the pension departments or Offices under the old scheme. The identification number provided suggests that you retired pre-PRA 2004. The issue can only be traced, verified and treated by the Civil Service Pension Office in the Head of Service Office with the presentation of proper reference documents.