• Workers jittery over possible job loss
Plans are at advanced stage by the National Insurance Commission (NAICOM), the industry regulator, to create new channels including referrals and agents like stockbrokers for insurance products distribution in the industry.
The Guardian learnt that the Commission is currently engaging stakeholders and considering the right mechanism that would ensure a successful implementation of the policy, which is expected to take effect in few months’ time.
However, it is feared that the new policy might create fresh challenges in terms of shrinking the size of the agency market, consequent job losses and profits of insurance broking firms across the country.
The Nigerian insurance market is largely seen as a brokers’ market, and control over 90 per cent of the premium income, leaving less than 10 per cent for other insurance agents, and even direct marketing channels by insurers.
The industry trade group, the Nigerian Insurers Association (NIA), on its website indicated that there are 350 registered insurance brokers and about 15,000 insurance agents. Already, the industry witnessed the loss of hundreds of jobs among agents last year.
With current economic recession and increasing market challenges, experts believe these developments will further weaken insurance penetration and reduce the industry’s contributions to Nigeria’s gross domestic product (GDP).
Furthermore, it is believed that more brokers will struggle to renew their licences this year, in view of the continued neglect of the agency system by insurance operators. With the introduction of more distribution channels by NAICOM, experts predict that profits will shrink further, as there would be intense battle for the little insurance businesses that will be available in the country, a development that could lead to loss of businesses.
The President, Association of Registered Insurance Agents of Nigeria (ARIAN), Gbadebo Olameru, in a telephone conversation with The Guardian, said the development is not new in the sector, as the Commission is trying to boost the performance of the brokers and agents.
Olameru however believes the policy may face certain hiccups, as the modus operandi is not yet clear, noting that there are several fundamental issues waiting to be addressed now than opening up more distribution channels.
He argued that in the long run, it may amount to double regulation, as some of the would-be referral agents are already being supervised by a regulator. “Instead of supporting the current channels (brokers and agents) to carry out their civic functions as expected, like the previous administration in NAICOM, the Commission is trying to compound the woes of the industry. It is like cutting off somebody’s head because of headache. Is that the right solution?” the agent queried.
Reacting to the development, the president, the Nigerian Council of Registered Insurance Brokers (NCRIB), Kayode Okunoren, declined to comment on the matter, since the guideline is not out yet.
He, however, said: “I will not comment until we see the guideline and if we have any issue, after it is made public, we will engage the regulator in our usual manner. The deepening of insurance penetration should be a collaborative effort and NCRIB, as an association, is a partner in progress,” he said.
The Commission had already discussed with stockbrokers, while plans are ongoing to engage accountants, lawyers, cooperative societies, market associations, and a host of others on the sale of insurance products.
The Managing Director/CEO, Independent Risk Analyst, Salihu Tola Ogunjobi, wondered at the competence and capability of stockbrokers to effectively discharge the duty of insurance professionals without requisite qualifications and competence.
He argued that aside the fact that such referral agents would pose operational challenge to the industry, especially at the point of claims payment, where insurance brokers are more competent and experienced, the move would cheapen the industry.
“The negative image of the insurance industry today was significantly caused in the past by ignorant or half trained agents, who were selling insurance products, hence, infringed on ethics. We are likely to have similar challenges if this proposed arrangement is implemented,” he warned.
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