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Source: Nigerian Insurers Association

Insurance as an Engine of Growth and National Development – Challenges of the Present and Future by Rotimi Okpaise. N’000. Page 2. Source: Nigerian Insurers Association. Growth Rate in Insurance Net Premiums. Source: 1. Nigerian Insurers Association 2. Central Bank of Nigeria. Page 3.

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Source: Nigerian Insurers Association

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  1. Insurance as an Engine of Growth and National Development – Challenges of the Present and FuturebyRotimi Okpaise

  2. N’000 Page 2 Source: Nigerian Insurers Association

  3. Growth Rate in Insurance Net Premiums Source: 1. Nigerian Insurers Association 2. Central Bank of Nigeria Page 3

  4. Source: 1. Nigerian Insurers Association 2. Central Bank of Nigeria Page 4

  5. Insurance Premiums as a Percentage of GDP in 2004 % • World 7.99 • Industrialised Nations 9.02 • Emerging Markets 3.94 • Africa 4.89 • South Africa 14.00 • Chile 3.50 • Kenya 3.00 • Nigeria 1.0 (approx) Page 5 Source: Swiss Re Economic Research and Consulting

  6. Common Feature Amongst Nations/Regions with High Penetration Levels are: • Strong Social and Economic Policies. • Presence of Strong Institutions • Relatively High (Disposable) Income Page 6

  7. Nigeria – Current Changes • Pensions Reform Act • Investible Funds @ 01.01.06 plus contributions thereafter • Effects on economy • Non Life opportunities • Compulsory Group Life • Introduction of Annuity Business Page 7

  8. Current Changes …contd (i) • Privatisation • Leading to the revamping of ailing critical industries and\or enterprises • New employments • Insurance opportunities/needs (e.g. Steel Industry, NA vis-à-vis Virgin, Conoil etc). • Other ‘Reforms’ e.g. • Banking Capitalisation may lead to increased consumer banking which will translate to increased personal lines insurance (Credit Life, Motor, Mortgage, Household etc) Page 8

  9. Current Changes …contd (ii) Other Reforms (cont) • Anti-corruption/Money Laundering laws – may assist in developing the ‘mind set’ for good ethics in institutional financial management. The effect of this should not be underestimated as it could lead to the retention of a significant amount of funds on our shores which will help depress borrowing costs and assist industry and SME expand – bringing along insurance opportunities. Page 9

  10. Current Changes …contd (iii) • Our current low business penetration level, coupled with potential upturn\expansion of the economy – makes one believe that the Insurance Industry is poised to significantly expand its business volume and, consequently its sphere of influence in our financial community. – but CHANGE is needed. Page 10

  11. CHANGE is a comprehensive concept and I will only highlight a few on the next slide. Page 11

  12. Current, differential, scientific pricing is needed on ALL our products (be it aviation, professional indemnity, motor etc) • Clients will increasingly want to know why and the basis for pricing. It is inevitable. • Products – have to be relevant to needs and user friendly. We have to increasingly directly (for own account) participate in Oil,Gas, Aviation, Marine business. Page 12

  13. We have to be professionally IT driven e.g. underwriting. • We have to imbibe (and be seen to imbibe) a fresh Professional Ethics and Good Governance and ALM • We have to invest in practical professional staff training and possibly hire hands from abroad. • We have, as an industry DESIRE to be BIG and a DRIVER to this economy. Page 13

  14. The above are basic ingredients to make the industry attractive to: • Investors, and • Policyholders and lead to the pooling\availability of Funds to the Industry’s disposal. Page 14

  15. Funds\Money will enable the industry to expand i.e. - create (i) employment (ii) wealth for owners - invest – especially in other enterprises - and hence be an active player\contributor in the growth of our economy. Page 15

  16. Health Non-Life Life • Post Retr. Health • Pre Retr. Structured • Health Cost Almost ALL areas in response to economic growth Group Life Risk Annuity In summary: I see a SIGNIFICANT increasing demand for Insurance coverage: Page 16

  17. …Summary Contd In my view, Industry Premiums can readily increase from under 1% GDP to 2.5% GDP – N206.6Billion (in current terms) within the next 2-3 years - because of both increased actual demand and latent demand that can be sensitised through marketing. Many are genuinely ignorant of insurance services. This increased growth will lead to the industry being a more visible economic participator - employer, owner, wealth creator. Page 17

  18. …Summary Contd • To achieve these, the industry will need to undergo some changes (as highlighted above) and possibly pool resources together – consolidations. • These are interesting times/opportunities - presenting us with challenges. Page 18

  19. IT CAN BE DONE Page 19

  20. Thank you ladies and gentlemen Page 20

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