…As FX triggers rising prices affect insurers, policyholders
The National Insurance Commission (NAICOM) has stressed the need for underwriting firms to deal with primary challenges in the sector, to revive the industry to risk-manage the country’s $1 trillion economic aspiration of the federal government before 2030.
The federal government initiative to establish an operating model and framework for economic and financial inclusion, aimed at transforming Nigeria into a $1 trillion economy by 2030.
The project was designed to combat poverty and catalyse sustainable economic growth from the ground up.
Speaking at the Insurance Meets Tech (IMT) 2024 in Lagos, the Commissioner for Insurance, Olusegun Omosehin, on the theme, “Revitalising the Insurance Industry to Risk-Manage Nigeria’s One-Trillion-Dollar Economic Target by the said for insurance companies, inflation makes it difficult to operate profitably, especially in the area of claims considering rising costs increase due to inflation.
In his paper delivered, Omosehin, said that for operators to mitigate the challenges posed by inflation, they must carefully manage their investment portfolios, adapt pricing strategies, and maintain adequate reserves.
The commissioner, who was represented by the Head, Lagos Control Officer for NAICOM, Julius Odidi, said that it is pertinent to reiterate that the commission plays a vital role in fostering innovative business solutions that address pressing economic and social issues in Nigeria’s insurance sector, saying that the commitment extends to ensuring prompt settlement of legitimate claims, promoting market growth through innovation, and driving commercial value within the industry.
The regulator offered that in achieving the objective of stimulating the insurance industry, stakeholders must of necessity to address the following fundamental issues plaguing the sector, which include among others; low insurance penetration: lack of public trust; market fragmentation; regulatory reforms, and digital transformation and adaptation.
“While the surge of COVID-19 raged in the year 2020-2021 threatening global safety and testing the abilities, resilience, and preparedness of nations globally to deal with the unexpected outbreak, the pandemic highlighted the need for digitalisation.
“In the insurance sector for instance, while lockdowns negatively impacted traditional distribution channels, they also encouraged insurers to develop digital offerings.
This has come to show that investing in technology, online platforms, and mobile apps can improve customer experience and accessibility,” he posited.
Odidi maintained that essentially, revitalising the industry to risk-manage Nigeria’s One trillion Dollar economy speaks to the insurance industry’s readiness and preparedness to de-risk the activities that are projected to galvanise productivity, innovations, economic growth, and development.
“With the rapid changes in technology and economic/business environment, this discussion is not just timely but also topical to reawaken the need for our dear industry to rise to the current realities of what is expected of us as an industry,” he stated.
The Commissioner submitted that the insurance sector must embrace innovation to meet up with the rapid market changes, and changes in consumers’ preferences, tastes, and lifestyles.
To him; “We must develop products that meet the demands of our market as innovation has taken the driving force in the financial services sector,” he added.
He said more critical to the theme is the issue of financial soundness and stability of insurance institutions, as a strong financial base is key to our success as an industry.
Having sufficient capital that is commensurate to the Risk of an insurer has become inevitable if the industry is to meet up with the consequential effect of a growing economy, managing a one trillion economy, and competing with our counterparts across the globe in the management of risks, he said.
urges
