There’s sanity in insurance industry now than before – Adeduro

 

The Managing Director of Law Union Insurance Plc, Ademayowa Adeduro in this Interview with EDET UDOH speaks on many salient industry issues.

New tax regime for insurance industry

I just want to tell you how it started. It started when I was a Council member of the Nigerian Insurers Association (NIA), the umbrella body of all insurance and reinsurance companies. Then we have to engage the PWC to help us fight this case. The erstwhile tax regime was very unfair. It was an injustice to the industry. It was only insurance industry that was singled out for that punitive tax regime wherein you cannot accommodate your expenses beyond 25 per cent of your income.

Insurance worldwide has always been supported by government so that they can play their roles well. But in Nigeria, the case is different and that is why when there is incidence, people begin to call on government for assistance. I can give you examples: Whenever we have fire outbreak either in the market or anywhere; everybody looks up to government for assistance.

Process of ongoing recapitalisation

It is going on very well. We have accepted the fact that we need to recapitalize first of all, not because National Insurance Commission (NAICOM) say so, but because all the industry practitioners have accepted that after the cancellation and withdrawal of the Tier-Based Minimum Solvency Capital (TBMSC) and the State Insurance Producers (SIP) policies, the regulator meant well for the industry.  The whole essence of a developing economy is to make sure that as much as possible you retain your foreign exchange so that your economy can develop well. A situation where over 70% of premium earned especially from oil and gas is being frittered to foreign reinsurers as a result of low retention capacity because we hardly retain more than 10% of that business formed the fact that we actually need recapitalization. 

Extension of recapitalization deadline

We must commend the leadership style of the Acting Commissioner for Insurance for carrying us along. The announcement of the recapitalization came as a surprised to all of us. It came at a time we were least prepared; almost in the middle of the year, precisely in May, 2019. A situation where you woke up early January or late December and prepared your budget for the year and in the middle of that year an event occurred that truncated your plans or put you in disarray was the reason we said no and called for deadline extension to give us adequate time to be able to accommodate the plan. Let me tell you, it’s not just about raising the money but the expenses equally involved. For you to raise five billion naira, you need more than five hundred million naira. So you need to plan for it. It’s not a joke. You need to put it in the budget. You need to convince your Board, which was the reason we asked for that extension and the Acting Commissioner for Insurance has accepted our request. We want to thank him for that.

Insurance Industry in 2019, expectation for 2020

It is a difficult task to assess us for 2019 basically because the performance of those entities that make-up the industry are yet to trickle into the system but I must say that 2019 was a challenging year for us, challenging in the sense that all of us were busy about doing recapitalization. We knew that come what may, recapitalization has come to stay. We were not even sure we are going to have the deadline extended. But bye and large, there is a continued effort of members to cooperate and collaborate more than ever before and there is more sanity in the system because people have come to embrace good corporate governance. We have come to realize that when we cooperate with ourselves, we are better off than when we do things individually. I think the industry is better for it.

Early passage of 2020 budget

I think we must commend this government because for the first time in about seven years, we have budget circle changed to start from January to December. The early passage of the budget is commendable. Insurance and indeed the economy at large will benefit from it. Instances that insurance will benefit are that some government establishment will now have their vote allocated to them early enough.  We have realized that Federal Allocation Committee (FAC) have shared about N716 billion this January for December 2019 allocation.  This will reflate the economy and engage the practitioners in the economy for economic activities. Insurance industry will benefit significantly because there will be more money in circulation, more economic activities taking place.

Taking advantage of informal sector

Concerning this area, we are engaging with various stakeholders. The entire membership of the Nigerian Insurers Association (NIA) has set up a committee to collaborate with the United Nation Development Programme (UNDP and NAICOM in ensuring the success of financial inclusion initiative. Our economy has been so informalised. The informal sector is bigger that the formal. So many people are in the informal sector including the house mates, drivers, artisans, mechanics and all these people must be captured into the financial net. I believe overtime when we get it right, everybody will benefit from the process of financial inclusion generally and the the best way to handle this is through digitalization of the economy. People should not be carrying money all over the place. When everybody is financially included, there will be no room for people spending outside banking system.

Attracting young professionals into insurance industry

It is a long process. For me, I started that process some years ago. Looking at the millennials and the best way we can handle this is for us to accept them. It is not to force them to accept us. We have to accept their ways of doing things. They can’t tolerate the way we are doing things especially for those of us that are old in the system. We are to tolerate them and bring them to ourselves, and allow them to function because the future belongs to them. One of the things they embrace so much is the Information and Technology (IT) platform because we are in the digital age. They want to do their things in the comfort of their homes without stressing themselves so much. I think overtime when every one of us is aware of these factors, we will be able to attract them into the industry.

Law Union and Rock which way forward?

For us in Law Union and Rock Insurance Plc, over times some people said we are too much of corporate governance but looking at it today, it pays us better. In terms of the ongoing recapitalization, for us we are wrapping it up in a few months to come. We are not waiting for the December 31, 2020 deadline. Because of our corporate governance, we have been able to attract enough people who are interested in investing in Law Union and Rock and I am glad about that.

Law Union and Rock has been in existence since 1951. We want to keep the brand name because the man that set up the company, the popular Mobolaji Bank Anthony, is no longer alive and his children are not here again but he has left a legacy for generations to come and we want to maintain that legacy.

Digitalisation

We want to keep expanding in this area, ensuring that all our operations are digitalized in such a way that people can easily buy our products any day including weekends online real-time without necessarily coming to our office. With the digitalization of our processes, we will continue to attract the best brain into the industry.

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