The crash in the Nigerian stock market is still having a grievous effective on many insurance company in Nigeria.
Some industries in the country that were similarly affected by the market’s misfortune have been resuscitated by some means of intervention, but the insurance companies seem to be languishing under the fate of the market’s situation.
Mr. Remi Olowude, Chairman, Nigerian Insurers Association, NIA, who lamented the situation in a report, however stressed the need for the Federal Government to intervene in the present situation bedevilling the growth of the sector.
Olowude lamented government’s refusal to bail out insurance companies that lost substantial volume of their assets as a result of the 2008 and 2009 global financial meltdown and crash of stock market.
He said, “Many institutions and enterprises all over the world benefited from bailout plans by their governments after the economic crises and the financial meltdown of 2008. In Nigeria, the banking, aviation and manufacturing industries benefited from the bailout by the Federal Government. Many insurance companies are still groaning from the losses suffered as a result of the crash in the stock market.”
The NIA chairman further lamented that recovery has been difficult and returning to profit for the concerned underwriters has been a herculean task, stressing the need to amend the Companies Income Tax Act, 2007 with a view to correcting the absurdities in the provisions that made the law inimical to the growth and development of the insurance industry in the country.
Already, the NIA has condemned attempts by other institutions in the financial sector as well as government agencies to take over businesses that should have been done by underwriters.
Olowude, in his reaction from a recent report, explained that the association was displeased by recent moves by the Ministry of Aviation and other government agencies to undertake insurance business illegally, not that the situation had negatively affected the place of insurers in the financial sector.
“It is an open secret that the Nigerian Civil Aviation Authority under the Ministry of Aviation is planning to establish an insurance fund for aviation passengers’ liability. All over the world, aviation passengers’ liability is subject to international conventions and the risks are covered by conventional insurance policies; Nigeria cannot be an exception,” he said.
In his complain, Olowude stated that the Nigeria Nuclear Regulatory Authority wants to establish a fund for nuclear damage insurance, instead of seeking conventional insurance cover for the risks, which are covered in international insurance market.
He also condemned the decision of the Federal Government to split the pension business between the insurance industry and the Pension Funds Administrators when it assigned the business to the National Pension Commission and the PFAs.
The NIA boss frowned at the government’s decision to move health insurance away from the insurance industry and put it under the National Health Insurance Scheme.
He explained that in 2007, the Federal Government divested its interest in the insurance business when it sold NICON Insurance and Nigeria Reinsurance Corporation on the understanding that they would be better managed by the private sector.
He added that the same government later withdrew the Workmen’s Compensation insurance business from the industry and transferred it to the Nigeria Social Insurance Trust Fund under a new name, Employee Compensation Scheme.