Campaign to rebrand insurance industry kicks off

Owing to the low contribution of the insurance sector to the Gross Domestic Product (GDP) and the poor perception by the general public, a nationwide campaign to rebrand the industry is set to kick off in June, 2018.
The rebranding campaign, which is being championed by the Insurers Committee, is geared towards changing the negative perception of the public towards insurance as well as growing the number of insurance consumers to over 150 million from 37 million. Addressing journalists yesterday in Lagos, Vice Chairman of the Publicity sub-committee of the Insurers Committee, who is also Managing Director, NSIA Insurance Company Limited, Mrs. Ebelechukwu Nwachukwu, said that the industry is set to launch the project which is expected to transform insurance operations in the country. Nwachukwu said the Committee, an association of insurance companies and the regulatory body, the National Insurance Commission, NAICOM, has set out seven cardinal goals that will be pursued. It will be recalled that to promote the project, NAICOM has contributed N40 million while most companies have also made their contributions towards the initiative. Earlier, insurance operators had agreed to raise 50 percent of the funds for the rebranding project from companies’ gross premium income while the balance of 50 percent is to be shared evenly from profits realized by insurers. The initiative, according to the Committee, will be driven via social media, print and electronics, adding that greater attention will be on the social media due to the youth population.
Multiple taxation: How underwriters lose N23bn
The 58 underwriting companies operating in the nation’s insurance industry have attributed increasing multiple taxes they are subjected to by authorities as a setback that made them lose about N23 billion in the past and the current financial year.
In the 2016 financial year, insurers paid N11 billion as taxes from a Profit Before Tax (PBT) of N29.4 billion declared and were left with Profit After Tax (PAT) of N18.4 billion.
In the just concluded financial year, market observers expect underwriters to pay as much as N12 billion as taxes for the 2017 financial year, a picture that will become clearer by the time the remaining underwriters release their 2017 accounts.
Beside paying tax on management expenses, short term lending, among others, insurers were also mandated to pay tax on claims, which is the core business of underwriting, meaning that, the higher the claims paid by an underwriter, the higher the tax to be paid on such claims.
The federal, state and local governments had embarked on aggressive revenue generation, picking on corporate bodies, including insurance companies, as the major source of their tax revenue.
Enforcement of these taxes reached an alarming rate in 2017 and in the current year with some insurance companies shut down by the Federal Inland Revenue Services (FIRS), until they were made to clear off their outstanding taxes.
While the situation has thrown the books of struggling insurers into negative, some had their little profit cut short by these taxes, while the big underwriters were equally struggling under the multiple taxation challenge.
As insurance operators continued to be subjected to arbitrary charges and levies by federal and state tax agencies, experts said the situation is making the operating environment uncomfortable, thereby increasing their expenses in the long run.
However, the major surprise is the payment of tax on claims, which, according to insurance business, is an expense, yet, tax authorities are categorising it as income.
Insider sources revealed that there are ongoing discussion between the Nigerian Insurers Association (NIA) and Federal Inland Revenue Service (FIRS) to review the provision that mandates underwriting firms to pay tax on their claims, among others.
Moreover, the operators have also approached the Ministry of Finance through the National Insurance Commission (NAICOM) to find a lasting solution to the issue.
Speaking on the development, Chairman of NIA, Eddie Efekoha, said insurance industry is subjected to multiple taxation that is gradually eroding the profits of insurance companies, thereby, affecting their ability to give good returns on investment to shareholders as well as stakeholders.
Maintaining that some of its members’ offices were closed down by agents of FIRS for tax defaults, Efekoha, who is also theManaging Director of Consolidated Hallmark Insurance Plc, noted that NIA has intervened and is already having a mutual understanding with FIRS to “soft-pedal” on this issue.
He, however, believes the permanent solution lies in amending the tax code, which takes time to amend by the National Assembly.
PAT rises as firm declares N5bn claims settlement
Mutual Benefits Assurance Plc has paid a total of N5.15 billion to policyholders in the country in efforts to regain confidence in the nation’s insurance sector.
According to the company, the audited financial accounts for the year ended December 2017 with the profit after tax of 176 per cent showed that shareholders of the company stands a chance of getting better investment returns.
The result, which was released on the floor of the Nigerian Stock Exchange (NSE), revealed that profit after tax increased by 176 per cent to N1.02 billion in the 2017 financial year from a loss position of N1.35 billion in 2016.
Gross premium written also appreciated by 16 per cent from N12.14 billion in 2016 to N14.03 billion in 2017, while underwriting income also grew by 10 per cent to N11.78 billion in 2017, against the 2016 figure of N10.70 billion.
The Chairman, Dr. Akin Ogunbiyi, said: “Despite the tough business environment, we have been able to bounce back to profitability and delight our shareholders. Dividend of two kobo per share will be paid to our esteemed shareholders who have stood by us over the years”
The result, which has been approved by the insurance regulator- NAICOM, also showed that the net claims paid by the Group in 2017 stood at N5.15 billion from N3.35 billion in 2016, resulting in a 54 per cent increase from the previous year’s record.
On claims payment in the period under review, the Managing Director, Segun Omosehin, said: “This is an attestation of our firm resolve to consistently honour our obligations to our esteemed customers, while improving our claims’ administration processes and procedures.”
Meanwhile, the recently released 2018 first quarter financial results were also impressive compared to the same period last year.

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