Insurance companies take pride in their ability to promptly pay legitimate claims, which demonstrates their integrity and reliability.
Policyholders can have peace of mind knowing that if a claim arises, their insurance company will handle it efficiently.
Therefore, it’s crucial to thoroughly research which insurance company to choose before making a decision.
In the past, the insurance industry in Nigeria had a reputation for not paying claims promptly, and some insurance companies even went bankrupt for various reasons. However, this has changed rapidly as the National Insurance Commission (NAICOM) introduced policies to strengthen and stabilise the industry.
A key policy was the recapitalisation of the insurance industry in 2003. Back then, NAICOM set a base requirement of ₦2 billion for Life Insurance business, ₦3 billion for General Insurance business and ₦5 billion for Composite Insurance business. This initial step aimed to ensure a minimum level of financial strength so companies could serve customers better.
Now, the insurance reforms bill passed for a second reading in July 2024 by the Nigerian Senate has proposed to peg the minimum capital base for non-life insurance business at ₦25 billion, life business ₦15 billion, and reinsurance companies to ₦45 billion.
This substantial hike reflects the perceived growth of the industry and the larger scale of risk they protect the public against.
Why recapitalisation matters
The recapitalisation exercise wasn’t just a one-time fix. It’s an ongoing process that ensures insurance companies have the financial muscle to weather challenges and meet their obligations to policyholders.
Recent events in the banking sector, highlight the importance of financial stability in the financial services industry. Similar steps might be necessary in the insurance sector to protect policyholders and maintain public trust.
NAICOM recognises that the current financial landscape is a shifting terrain. Just like a veteran fisherman on the Lagos coast adjusting his nets for a coming tempest, NAICOM might propose further recapitalisation requirements. These new requirements would act as a financial anchor, securing insurance companies and ensuring they remain strong and adaptable in the face of economic uncertainties.
Imagine a world where an economic downturn hits, causing a surge in claims. A well-capitalised insurance company would be like a sturdy ship, its financial reserves providing the ballast to weather the storm. It could handle a higher volume of claims without floundering, fulfilling its promises to policyholders. Conversely, an undercapitalised company, like a vessel caught without an anchor, could be tossed and turned by the financial waves, potentially struggling to meet its obligations.
By setting higher reasonable capital base requirements, NAICOM aims to create a more resilient insurance industry. This would foster public trust and confidence, knowing their insurance providers have the financial muscle to be there when needed. It’s a future where insurance companies are not just weathering storms, but navigating them with the expertise and resources to ensure a safe harbour for policyholders.
How to identify reliable insurance companies
Now, let’s talk about how to identify reliable insurance companies to trust with your risks.
Things to look out for:
Capital Base: This helps assess an insurance company’s financial strength based on its activities, indicating its resilience. Insurance companies aim to secure enough capital to maintain and enhance their financial position.
The public should seek out insurers with strong capital bases, as this impacts the types of insurance activities they can handle.
A solid capital structure and technical arrangements enable insurers take on high-risk activities, such as oil and gas, where the industry loses billions of naira annually due to premium flight. Also, the volume and type of risks an insurer can cover depend on its capital and reinsurance arrangements.
Technical Expertise & Leadership: The success of any insurance company also depends on those who lead the organisation and its employees. Suffice to say that they must be technically sound and have the experience to drive the company to its crescendo.
So, the insuring public must look out for the leadership vis a vis their competencies/technical know-how before placing their risks with such companies
Competitiveness: The competitiveness of an insurance company is not just in the amount of businesses it underwrites or the . that it showcases but it is in its ability to pay genuine claims promptly.
Claims payment encourages repeat purchases and customer loyalty, which of course enhances the company’s competitiveness in the marketplace. So, anyone seeking insurance cover must look for insurance companies that pay claims.
Customer Experience: Beyond paying claims, what does the customer experience journey from the initial product inquiry to the deal finalisation look like? Choosing an insurance company that treats customers with respect, empathy, and as partners in progress is essential for managing one’s risks effectively.
Visibility: You should not be doing business with a company that is not visible in terms of physical structure or online presence, but more importantly, good financial stability. Additionally, in this digital age, a good insurance company must be visible on the internet and should be able to transact businesses.
We are in a time where ease and speed of doing business is sought out for by would-be consumers of insurance products and this can only be realised through the use of technology.
Regulatory Stamp: An insurance company willing to transact insurance business in Nigeria must be licensed by NAICOM either for Life business, Non-life business or Reinsurance business. Without this, it will be illegal to transact insurance business in Nigeria. So, ensure the insurance company you want to place your risk with is licensed to carry out the type of insurance business approved by NAICOM.
Reinsurance Arrangement: A good reinsurance arrangement in place by an insurance company gives the insurance company capacity to do business and the strength to absorb any shocks when heavy claims hit the company.
Reinsurance is an arrangement not visible to the insured but serves as a backup to the insurance companies. It is wise to ask from an insurance company who are their reinsurers as this also guarantees the continued existence in business.
Don’t settle for anything less than the best
At Coronation Insurance, we pride ourselves on meeting all these criteria and more. Our strong capital base, expert leadership, and commitment to customer satisfaction ensure that your claims are handled promptly and efficiently. We go beyond just being an insurance provider. We strive to be your trusted advisor, offering expert guidance and comprehensive solutions to manage your unique risk profile.
With robust reinsurance arrangements and full compliance with NAICOM regulations, you can trust Coronation Insurance to provide the security and reliability you need. Choose Coronation Insurance today, and have confidence knowing your risks are in good hands.
For more information, visit our website: www.coronation.ng to get started. Call 02-012774500 | 02-012774566 | 02-012774577 or send an email to info@coronationinsurance.com.ng.