About 80% of the total earnings made by the insurance sector of the Nigerian economy is being facilitated by its insurance brokers, revealed Samuel Ogbodu, the Managing Director of Sunu Assurances Nigeria Plc.
Ogbodu made the revelation over the weekend in Lagos at the Capital Market Correspondents Association of Nigeria (CAMCAN) Quarterly Forum themed, “Deepening insurance penetration through effective broker engagement.
An insurance broker is anyone who sells, solicits, or negotiates insurance for compensation.
According to Ogbodu, without the brokers, there won’t be insurance; “they contribute about 80% of the earnings. We place very high premium on brokers,” he said.
Ogbodu explained that brokers help in product development, maintenance of high vast network and enhance negotiation. They also help towards risk mitigation and help clients to stay updated on policy and regulatory developments, among others.
He said both the retail brokers and commercial Insurance brokers were rightly positioned to take up the fresh challenges the new capital requirement would throw up, for the utilisation of new opportunities to expand insurance penetration in Nigeria.
Debunking the negative appellation given to brokers in Nigeria, Karim Dione, Executive Director, Strategy and Performance, said “a lot of them are doing the right thing.”
He also lauded the recapitalisation effort of the insurance sector, adding that players in the sector needed to have profitable businesses. Dione mentioned that the capacity in Nigeria in terms of size, potential, and resources was enormous for the Sunu Group to meet the new capital base.
“SUNU is here to stay because Nigeria is the real market in Africa in size, potential, resources and population,” Dione said.
He said the company’s fully paid capital presently stands at N7 billion against N10 billion required for general insurance.
Dione said the company would fully comply with the commission’s policy but needed more clarification from NAICOM on its shareholders funds or paid-up capital.
He maintained that enforcement of the new capital requirement would boost penetration, and also enable companies to take bigger risks.
“Nigeria is extremely competitive, when there are too many players in the industry, it will lead to price dumping.
“We need to reduce the players in the industry to boost the reputation of the industry,” Dione said.
Mr Ladi Oyekan, YOA Insurance brokers, while responding to some issues raised, said that ideal insurance penetration had not been attained based on the country’s penetration.
Oyekan said that low disposable income eminent in the country was affecting insurance penetration.
He then observed that the sector was working towards a policy that supports monthly premium payment which would make it easier for policy holders to drive financial inclusion in the industry.
Mr Femi Ojeremi, Farble Insurance Brokers said that Nigerians “like putting something down and having something in return”, which does not support insurance.
“Nigerians are wasteful in things that are irrelevant, many people have multiple phones and recharge them with average of N60,000 annually but they cannot pay N5,000 insurance premium annually to protect or cover their lives,”Ojeremi said.