Poor regulation, deficiency of reliable data and statistics, low capital requirements, as well as limited enforcement of regulatory provisions have been classified as key setbacks and challenges to the growth of the African insurance market.
In Nigeria, industry operators said the major challenges in the industry include low patronage, despite the various legislations enacted to promote patronage.
They also identified other challenges facing the industry to include inadequate enforcement of compulsory insurances, failure by the government to lead by example in patronage of insurance, inadequate budgetary provisions for the insurances of government’s assets as well as underutilisation of capacity in the real sector of the economy.
For the sub-regional market, a report tagged: ‘The African Insurance Barometer, a survey conducted by the African Insurance Organisation (AIO), on the sub regional market, said in some markets, an abundance of undercapitalised companies led to excessive competition over price rather than for service, which is capable of eroding consumer trust in the industry.
The report noted that while cooperation within the CIMA (Inter African Conference of Insurance Markets) in West Africa is a very positive and successful example of regional collaboration, there is the need for greater cooperation among other African regulators, to harmonise regulatory regimes.
The report further pointed at lack of empowerment of regulators, deregulation and a significant gap in the regulation of micro insurance as additional challenges facing the regional market.
The Nigeria Insurers Association (NIA), through its Chairman, Eddie Efekoha, who spoke at his investiture ceremony in Lagos, said the performance of most insurance stocks on the Nigerian Stock Exchange (NSE), have been so flat that financial analysts have stopped including insurance firms in their forecasts.
He noted that businesses are facing greater threats principally as a result of dwindling revenues, poor infrastructure, and lack of power, inflationary trends in all sectors occasioned by the decline in the value of the naira.
He listed insecurity amongst other challenges as impediments facing insurers, adding that exportation and local manufacturing are currently at the lowest ebb.
He noted that the insurance sector is directly impacted by these disruptions, adding that the development called for internal cohesion and collaborative action. “It therefore behoves on all of us as industry players to respond quickly to the changing dynamics of the market space so that we can remain relevant and bestow a worthy legacy to the future generation of insurers,” he advised.
He said it was in the light of the developments in the local market that he decided to commit his stewardship to address the theme: Sustainable Market Development Through Stakeholder Engagement.
He said: “Basically, all the programmes we will be executing will find space under this central theme. Very often, policy makers misunderstand insurance as an instrument for financial intermediation; it is therefore necessary to enter into constructive engagement with relevant stakeholders.
“This will include the need to share knowledge with judicial officers–magistrates and judges on the workings of insurance business, and to fully equip them to be able to respond adequately to the rising cases of fraudulent claims in the market, among other adjudication issues. “We will engage with the legislators in the process of making laws that affect the economy at large and insurance industry in particular.
They are major stakeholders whose support the industry would require at all times. The various bills before the National Assembly require concerted efforts to push through the industry position. It is only with the active engagement with the lawmakers that the industry can protect its business interests.
“On tax matters, we are all witnesses to the lingering issue of the heavy tax burden imposed on the insurance industry by CITA 2007. This further strengthens the need for us as an association to continually engage with the tax authorities with a view to amicably resolving all the issues and avoiding areas of future conflict.”