WE NEED INSURANCE MORE NOW THAT THE ECONOMY IS DOWN- URANTA

• Justus Uranta
The Nigerian insurance industry is grappling with a lot of challenges, chief among which is lack of awareness among the populace. This, coupled with the downturn in the economy has suffocated the industry leading to low profitability among other things. But Managing Director and Chief Executive Officer of Niger Insurance Plc, Dr. Justus Uranta who is the Chief Executive Officer for this week believes that the economy is not doing particularly well adding that the industry can do a lot better than it is doing now.

'If activities in the economy hit a low side, every company must be affected. If it is on the up side, we take advantage of it. So right now that the global economy is suffering, every economy, every practicing going concern must be affected, depending on your activity anyway,' Uranta said.

Excerpts:
Insurance industry in the Nigerian economy
The economy as we know today, I am sure you can lecture me, is not doing particularly well. We can do a lot better than we are doing now. Therefore, every player in this economy must be affected. If the activities of the economy hit a low side, every company must be affected. If it is in the up side, we take advantage of it. So right now that the global economy is suffering, every economy, every practicing going concern must be affected depending on your activity anyway. Some done less affected than others.

That is the way I put it. In my company here, there was a time when our price was between N9 to N10 per share. It was not the 50 kobo you are seeing today. The same thing applies to all other aspects of the economy. If it is good, you go with it, if it is bad you go with it. However, when you come to insurance, the company on its own may not be doing well, but the low level of activities in any country brings out the necessity of insurance. I say so because I always like to use very costly examples.

So at this time of downturn in the economy, that is when insurance is very necessary because a lost of asset is double jeopardy for the owner. You lost it; you have difficulty in replacing it with your own funds. But if you have insurance, the premium you pay will take care of it and then bring you back to the same position you were before the loss and under the present economic crunch you will be better of it.

Plan to beat competition and be on top
Competition is not bad itself. In fact, if anything is a big booster, users will be affected. That is practitioners and better still, the end users because when there is competition among productive sectors, they tend to come out with excellent products, they tend to come out with competitive prices, so that they can sell. So at the end of the day, the end users are better off for it. However, under the circumstances we find ourselves, the issue of competition, challenges us to think of better ways of serving the public, you have known. You need to have an edge over your competitors to be able to remain in business. So we look at our service delivery, we look at how we can improve on it; and in the last two years, in response to environmental change, we have introduced a special agenda in this company called the 'NEST' agenda. It is an acronym for, Niger Enterprise Strategy Transformation.

This agenda is created to answer this question, because as competiton gets stiffer, you must survive and how do you survive? You must strategize, you must introduce new tactics, new strategy to beat your competitors. So we look at how best we can serve the public in terms of turnaround time. We look at our manpower; we try to train people so that they can be a lot more efficient and improve on their skills and experience. We also look at the facility we have, we are trying to improve on them so that collectively they can help to improve that service delivery.

And then, in terms of our claim administration, we always controllably review it so that we reduce the time it takes to settle a particular claim because when your client is aggrieved, sad by way of an occurrence of an accident, the only language he wants to hear is to make him happy. And how do you make him happy, it is through claim settlement. So all these put together is what we controllably drive under the NEST Agenda to make sure that they remain afloat. And our target of course as any other serious minded company is to be the number one. And the number one position is very tasking. In fact it is as difficult to get there as it is to remain there.

Relationship of Niger Insurance with government
Those who think Niger Insurance belongs to government should not be blamed. Even the name itself is synonymous to Nigeria (Niger), a river flowing from all the way, north down to the south. Seriously speaking, anybody that thinks that Niger Insurance is government owned is not entirely wrong because at a point back in the sixties, during the introduction of indigenization decrees, the company itself was taken over by the FG from the real owners in England and they ran it for a while and passed it on to their baby company, NICON Insurance. That one also was commercialized. There after it became privatized; trading today on the floor of the Nigerian Stock Exchange (NSE) trading on shares. So we are fully privatized now as supposed to what it used to be in the past when government has some interests.

Whether kidnapping, bombing, flooding are insurable

Insurance is about the unexpected. It is about fortuity, something you did not expect to happen but happens. It is not something you expect. If I know that this filling station will go on fire, and the owner wants insurance, why should I give him, considering that the money he will pay is always very disproportionate as supposed to the liability, which I am admitting? I mean that the entire value of the filling station might be N200 million and ask him to pay .2% of that. So you know the proportion of 2%.

You will be paying 2% of N200 million, 1% of it will be N2 million, .2% of it may be N400, 000 in exchange for N100 million. No sane person can do that and expect that in the next 3 hours he will be overburdened by financial outlay of close to N100 million. So, not every risk is insurable. However, as far as its fortuitousness is concerned, there are risks which ordinarily you can see on the face of it, it looks as uninsurable but can also be insured. In fact the bottom line there is that it must be unexpected. The damage or result of the peril must be unexpected. If you come now and tell me that you are going to Onitsha and will hit your car when you get to Asaba then I know that you are prepared for that therefore that is not fortuitous.

That means that I cannot insure it. Perhaps I decide, and ask you what is the value of your car and you said N10 million and I said okay drop N10.2 million then I can insure it. In that sense, every risk is insurable provided you are able to pay. But, however, narrowing it down to what I think you have in mind, terrorism and all that; terrorism, before it is identified, you want to insure it, you will find out everything about it, frequency of terrorism in that area, the magnitude and all that, and then we can give you a charge.

If you can pay, it becomes an insurable thing. Just like flooding as well. Flood is not exclusion in its entirety; just that it must happen accidentally just like that. So if I know that this area is a flood prone area, that the next rainy season or the next rain that comes, it must be flooded and there will be damages again, it is not fortuitous. But when you don't expect it and flood comes' here and sweep the whole place, the flood there is accidental and you can afford to insure that.

Enforcing compulsory insurance
Yes, we have other compulsory insurances in place right from way back before 1930. There are the motor insurances. So now that the government is, through the National Insurance Commission (NAICOM) is considering other areas; from experience anyway because I want to sincerely talk about building in the course of erection that you and I know the frequency of its collapse here and there in the country. I think that occasioned the necessity for government to insist that, such buildings in course of erection, buildings over two floors and so on that are for public use must be insured. It is for the benefit of the users more than for the owners actually. So it is enforceable.

So what government through NAICOM is doing now is to sensitize the public about the need to have some of these aspects of our lives compulsorily covered by way of insurance. Thereafter I think they will need a lot of other factors like legislation, to give it a backing and then further sensitization so that through legislation there will be statutory penalties. The law enforcement agencies will be involved to go round where they cannot find any insurance on such property that is so designated, then the owner will be penalized or compelled to carry that insurance.

Improving on the price of insurance stocks on the NSE

You are narrowing down to insurance but as you can see, crash in the price affected every sphere of the economy locally and globally. This is a peculiar situation we found ourselves in now. In the past if particular quoted company finds its shares dropping, a little research can reveal a number of reasons why that is happening and then they will be in the position to stabilize it and find a way to make it move up again by certain activities. You have first of all to tell the investing public what program you have as far as the company is concerned to encourage them that this going concern is on the verge of doing even better. So by so doing, the shareholders will be encouraged to transact on your shares. What we have today is a global meltdown. You can see that out of over twenty- ever companies, insurance companies that were quoted, not more than three have their prices above N1, the rest of us are cashed to the minimum of 50 kobo.

For example now Niger is going into right issues. We are going to raise huge money to plough back and improve on our shareholders money and other provisioning. If the investing public hears that, it is positive information that will confirm to them that we are doing something that will further sustain the license of this company. So such efforts you expect baring every other short comings like investor fatigue because as we speak now people have little or no confidence in the stock market. So no matter the amount of noise you make, they will not believe you until perhaps they see things happening.

NAICOM regulation
That question is extremely subjective. Regulation itself is a very difficult challenge. Let me digress a bit. You can see what is going on between the CBN and the banks. If you are in Sanusi's shoes, you don't know what you would have done in this dispensation. I don't know how you feel? But having said that, I will want to also join forces in commending NAICOM. The past commissioner before the current one had a lot of knocks from the market. This market is such that we try most of the times to tell the truth especially about our operations.

This young man is very straight forward. He was part of us and by virtue of his age, at the expiration of his tenure, he will come back to the industry. So he appreciates that position and is using that to his advantage in the sense that he does not see us as the leg. He sees some kind of collaboration before the regulated and the regulator and that is a better approach, shortly after the opening of the NAICOM Headquarters in Abuja, the Commissioner had the course to call all the trainees to a meeting and there and then he was bold enough to tell us that, this time, it will be more different from what it used to be in the past.

We have to collaborate more, we have to work towards solving problems, because it is common sense that if you are a regulator and you are too strict to the letter and you end up killing all the companies you are to regulate, haven't you killed yourself. There is nothing like that. In that extent, we appreciate the style of the current commissioner and his team. We only but wish them better luck and also assure them of our cooperation.

Areas needing attention
Well thank you. What I want to say is like repenting myself. It is what they are already doing. They are a listening set of supervisors and over the years and up till now that we are speaking, they always try to provide a forum for interaction between themselves and the regulated. We have regular meetings, given which times people bare their minds and they listen. So in terms of what they are doing, I can say that the industry is quite happy with them. This is because the bottom line is that you have to understand whom you are regulating. The moment you understand whom you are regulating, you understand their problems, their predicament, their challenges, then you will be able to be proactive in terms of regulating them and by way of appeasing their problems and probably providing solution to make sure they remain in business..

Relationship between NAICOM and NIA, NCRIB, ILAN
In this sense we cannot be talking about superior regulator here. We shall be talking about practitioners that are in senior activities that are doing the same thing. Underwriters have complete different functions. They are the actual risk bearers. By underwriters I mean direct insurance companies; then the brokers (NCRIB) who have all brokers under them. They are the intermediaries. They don't bear risks; they introduce clients and businesses to underwriter. So their roles are very clear than the adjusters. It is not until a claim occurs or until you want to insure some huge assets that you bring them in to look at what is happening. We also have assessors.

Their role is also different. All these are distinct roles that do not make room for any clash. Perhaps the only one that you may look at that may suggest some aspects of clash but there is actually none, I can assure you, is NIA and CIIN. But I can quickly tell you they have different roles. Nigerian Insurance Association is the umbrella body for all insurance practitioners; and Chattered Insurance Institute of Nigeria are particularly made for academic development, training and academic development so you can see there is no clash. That is why out there in the market, you can't hear us clashing. The worst disagreement we have is may be to percentage commission which is also statutory. It is there, laid down. So if you are doing motor, the percentage is there for your commission and so on and so forth. Even in the loss adjusting aspects too, it is tariff based so you have a value, you have this, you apply the tariff and you get your figure.

Encouragement of rate cutting
We cannot encourage rate cutting. The issue of rate cutting I want to believe is for new companies, for new entrants who have not been able to build any base for themselves; asset base, customer cliental base and stuffs like that. It is not with a company that is 50 years old. We have been tested over time, tried and tested like they said and found to be solid and reliable. So our customers hardly leave us. In fact most of our customers are our marketers that recommend us to other customers to come to us. So we don't encourage rate cutting. In fact we are known in the industry as being ethical. You will not be able to meet your claims obligation so why cut rates? When the claim comes, are you going to tell your customer that he did not pay adequate premium; that is why you cannot settle the claim?

We give discount where necessary depending on how you have been handling your assets. This is because when you charge very low and ridiculous rate, you will not be able to accumulate the funds early enough to be able to meet a claim obligation on course. So you have to fail in your ability to pay claims and that in itself rubs us negatively in our images.

Elimination of brokers
Well, I am happy you said that shareholders called for the elimination of brokers because of controversy that arise in the course of settling cost of business called premium. Remember that shareholders will not be pushing us because no professional will support the elimination of middlemen. I want to use the middlemen now for us to understand the role of brokers. You see, there are middlemen in so many businesses. Ordinary renting of house, you have middlemen. Is it possible to eliminate agents? So, in our own business, brokers have very crucial role to play.

They are also professionals like us and qualified as we are and are equally experienced. What they do is to profess that they know it all. They can introduce to you a client that is very reliable that cannot disappoint you especially at times of meeting your claims obligation. You cannot dismiss the fact that in every ten there must be a Judas. So if one or two brokers are not doing the right thing that is not enough to call for their elimination. And one of the private practices we do is broking business. So any chief executive of insurance company, top ranking person by the time he retires, he resorts to broking, so there is no way you can eliminate the brokers because they have very important roles to play.

Motivations for your workers
Job stability. If you look over there, you see our mission statement. We are working with well motivated employees. We are using the high level information technology (IT) platform to ensure that we provide value for our shareholders. So as far as Niger Insurance staffers are concerned, they are enjoying one very key thing in employment and that is job stability. I am sure as journalists, you cannot remember the last time you heard of staff-management problems in this company. What does that tell you, that at the least of average, staff is serving and we continually strive to see that they get their times' worth for being there with us. No!

We don't joke with staff welfare. Of course when times are hard, the funds may not be available, we explain to them. Of course that was the reason why I had to stay back a little before coming to join you here. It was the same staff problem I was addressing. So we take staff matters very seriously because we want to work with highly motivated employees because it is only such caliber of staff that can give you the best in terms of meeting efficient customer satisfaction and service delivery. We provide working tools; those who are entitled to cars, they get cars, those who are entitled to every other working tools, training of course; training and retraining is one of the fundamental aspects of this administration.

We insist on human capital development and expose our staff to as much training as we can. We send staff to all over the world, to America, Britain and Africa especially South Africa to expose them the more and as we speak now, we have about five staff in West African Insurance Institute, the one we call WAII in Gambia, of which my humble self happens to be the Vice Chairman. And we also take advantage of that because we are one of the companies that send the highest number of staff to that place for their one year programme in insurance.

South Africa really leading Africa in insurance
It is not exaggeration at all. I don't know the last time you visited South Africa because that may have accounted for this question. This is because if you have ever been there, you will know that no doubt they have facilities well ahead of us. The reason is very obvious. Let me be a very bit funny. We were in a hurry to drive our own colonial masters away, back in the 1960s. They only got their independence when Mandela was released in the 1990s. So, their own Colonial Masters were there 30 years after we have sent our own packing helping to prepare ground for them, providing all the facilities, replicating what we have in the developed world. And going to there you don't need anybody to tell you. The moment you land in any of their airports you begin to have a very different feel.

In fact there is no great difference between London in terms of developments and some parts of South Africa. The only different is that probably you see more black people/heads than whites. Otherwise even as we speak today the whites are still somehow on the driver's seat. The black guys can control the political aspects of it but the nitty-gritty of the economy is still in the hands of the whites. And that is why we go there to borrow what they are doing.

Why Insurance companies are not paying dividends
I blame the inability of insurance companies not paying dividends as expected to both the individual companies and the stocks on the exchange not doing well. However, one precedes the other. There has to be an encouraging environment first and foremost for the economy and all its players to strive. Then you can now come back home, the management of these companies to take advantage of this flourishing environment. If the environment is rough and unfriendly, there is hardly any serious headway any individual company can make. They can make progress but the rate will be very slow.

Africa-Re as 40th in the world, the implications
First and foremost the fact that Africa-Re is headquartered in Nigeria is one big advantage for us. But let me quickly remind you that it is a sub-regional outfit. It is not a Nigerian company. They are only headquartered in Nigeria so their operations go beyond the shores of Nigeria. They operate globally as a very solid financially based reinsurance

company. They accept businesses from Nigeria, the West Coast, Africa and any part of the world.

And I can go to the best securities in the world including Africa Re. So it is a good sign at least they are in this clime and they are doing well. For me as a practitioner, I am happy that at least thy can meet my claims obligation if and when they occur. The same thing applies to every other CEO both in Nigeria and abroad. So I like to commend them to keep up the good works they are doing and give good services in consonance with their level of improvement.