Nigerian insurance companies have been warned to be wary of fraudulent claims by their customers as it has been predicted there may be recession.
Group Managing Director, Custodian and Allied Plc, Wole Oshin, gave this advice while presenting a paper on “Opportunities and Returns in the Nigerian Business Environment” at the 2015 Insurance Professionals’ Forum organised by the Chartered Insurance Institute of Nigeria in Abeokuta, Ogun state recently.
In view of the fact that the nation’s economy has been slow and may be sliding into recession, he said the development will naturally affect the insurance business across board.
While the industry is still battling with negative perception, he said Information Technology is below par, industry-wide data gathering and document management is poor, adding that this invariably affects proper product pricing and development.
Other challenges facing the industry, according to him, include the fact that the industry is highly fragmented and competitive, thereby affecting the pace of growth in overall market size, as well as challenges in the enforcement of compulsory insurances and scarcity of human capital in certain specialised areas such as Actuaries.
As the life insurance business contributes 25 percent to the industry’s income at present, Oshin said a shift in focus to retail business would largely unlock hitherto uninsured risks through product channels such as mobile phones and retail outlets.
He also said that the bottom of the pyramid and low income mass market holds a huge potential for the industry albeit in the medium to long term such as agricultural insurance.
Oshin maintained that the industry remains largely underpenetrated with insurance density (insurance premium as a percentage of GDP) at 0.225 percent considering industry premium of approximately $1.5 billion in comparison to other African countries.
Nonetheless, he said the recent happenings in our industry are pointers to a reinvigorated and competitive industry including favourable economic performance, recent policies and government support through various legislations, and the repositioning among industry players to harness the huge market potentials through Mergers and Acquisitions.
The insurance sector, he further said, was going through a process of change and recovery, stressing that with recent developments in the economy, the companies that will stand tall are those who are savvy enough to navigate through the predicted downturn in the economy.