‘Mobile Money Providers Will End Poor Practices In Financial Sector’

For 2021, we are certain that the worst case of coronavirus is over and believe that we will not have the experience of #EndSARS again. We are looking forward to a better year. We are hopeful because a vaccine has been developed against coronavirus. We have seen a spike in the oil price. It’s trending towards $50 per barrel and will go a little bit above this and it will trickle down to the economy of the country. Because whether we like it or not, when there is no enough money for the Federal Government to spend on infrastructure, even on recurrent expenditure, it’s bound to affect the economy. Because oil is the greatest earner of foreign exchange, if we are not doing well in this area, it has a spiral effect on the rest of the economy. So, because of what is going on, we believe that the government will be more comfortable to spend on infrastructure next year and we will be able to get out of recession. With this, we are very positive. That is why we are having a projection of over 60 per cent growth rate in our budget topline for 2021.

Don’t you think tighter disposable income may negatively impact insurance?

I am sure the next report of the Nigeria Bureau of Statistics (NBS) will show a lower percentage in terms of the recession. We are at 6.1 per cent recession contraction, but I believe that the recession will go down and by second quarter of 2021, Nigeria will be out of recession. We will be on the growth path again as the oil price is gaining strength and vaccine has been developed. The government has even opened the border. All of these will bring back activities in the country. Despite the fact that the government is scared about a second wave of coronavirus in Nigeria, but I can tell you that it won’t last long.

What is your assessment of the closing of Nigerian borders?

I said it sometime in April that closing the Nigerian borders was going to hurt the economy, because it takes someone to develop the capacity to produce goods you want to supplement. That is the reason the government has come back to realise that they are better of opening the border. Who gains apart from the African Continental Free Trade Area (AfCFTA) Agreement? The revenue of the Customs has been cut. Apart from the exportation of crude oil, the next place where we earn so much money is from custom duties. The income has shrunken significantly and we have some companies exporting goods through the land border to other neighbouring countries. Even as bad as our manufacturing companies are concerned, people are still exporting our manufactured good to our neighbouring countries. The government closed the borders. A lot of the food items that are coming through that neighbouring border were all down.

Now that borders have been reopened, what do you think would be the impact?

The impact is that the economy will be rejuvenated. There will be less pressure. There’s social pressure whether you like it or not in Nigeria. People are agonising, some companies have failed and businesses have failed. People trading at the borders couldn’t do their trade again and they went into crime. I am not saying Nigerians are criminals but that is the reality we are facing. There has been a lot of social pressure. But all of these will reduce and activities will pick up. As at today, for a population of almost 206 million, the total number of vehicles we have in Nigeria is just about 13 million to serve a population of 206 million. All the government needed to do was to make sure that when these vehicles are coming into the border, just establish the structure so that they will pay the right duties. But to say they can’t come in will be hurting the economy.

What is the extent of the #EndSARS protests on the economy and insurance sector specifically?

Those of us that are into insurance knew from the beginning that the #EndSARS protests would lead to the destruction that came from it. But we couldn’t quantify to say it was going shut down almost a quarter of the economy. Lagos State accounts for more than 25 percent of our Gross Domestic Product (GDP). So, shutting the state down killed almost 40 per cent of GDP opportunity. So, of course, we have seen it that it has impacted negatively on the economy and more to the insurance sector because we bear risks of other institutions and what are trying to do is to see how to come out of it? For us in Law Union, we have quantified it. Our exposure is in excess of N2 billion claims to be paid. We have the capacity to pay and we are prepared. This is because we have been very conservative in managing ourselves and in keeping reserves. This is how to practise insurance, where you have adequate reinsurance arrangements and reserve. This will enable you to meet up with claims at any time. So, we are prepared for it. I want to believe that quite a number of the industry practitioners too are prepared for it. We have met with our regulator and our umbrella association and we have all agreed that this is the time for us to let people see the essence of insurance. We will not rely on small print or little things to deny paying claims. But, of course, we will still do the right thing because insurance is a business and investors want returns. We will go through the loss adjustment, people that pay their premium and are genuinely impacted by this, we are going to pay their claims. We don’t have a choice. We must stand by them. It is time for us to help reflate the economy and people will be back in the business.

What are assessments of the risks in the financial services sector?

Life itself is a risk. Leaving your home in the morning and just crossing the road alone is a risk. Risk is becoming more complex because the whole world is becoming more complex so people should get insured. Insurance is very cheap. It is the only thing God has given to us to manage risk in such a way that for a token amount of money, you will be able to go to bed and sleep very well and be sure that somebody will take care of your risk. There are other risks models but insurance has come to stay but whether insurance companies have come to stay is another thing. People will always buy insurance. With the coming in of mobile money and service banks, some banks that are not rendering good service will fold up. Because you do your banking now online and real-time. You don’t have to go to any banking office, so it is either they provide good services or fold up and that will happen to insurance as well.

There are expectations that the National Insurance Commission’s (NAICOM) portal will end rate-cutting and other abuses, what is your view?

I agree with this because we have been agitating for the right technology to solve the problem of rate-cutting and restore discipline in the insurance industry. Because there is no amount of appeal you can give to people, that will make them obey the rule. But with technology, a platform that can guide everyone that will see whether you are charging adequatly and will correlate with the data you are supplying to the regulatory authority will give the ideal solution to the problem of rate cutting in the industry before the entire industry gets destroyed. I believe we should use technology to aggregate every activity of the industry, including the public sector because until we get there, we realise that the rule of thumb or the analogue system we are used to can’t take us anywhere.

How far has your company gone in meeting the mandatory recapitalisation requirements?

We have gone far with our recapitalisation. When NAICOM announced the recapitalisation, some companies did not take it serious but for our board and management, we took it very serious. We launched out very early. We were looking for two options, merger and acquisition and a buyout. The merger and acquisition did not work out for us but the buyout worked out. We were able to get Verod Capital, which invested in Law Union and Rock, buy out the previous ownership of the company. So, as we are speaking, Verod Capital owns Law Union and Rock 100 percent through schemes of arrangement, which were well publicised. Since their coming in October, they have been injecting quite a number of initiatives for us particularly human capital, rebranding, product innovation, technology improvement and we are very glad. They have also been part of business acquisition, too, in terms of business development. They have been up and doing.

Verod Capital is an anglophone company with various interests in other insurance companies that include Tangerine Life, ARM life and recently acquired a Pension Fund Administrator (PFA). It also has interest in technology companies, CSCS Plc, pharmaceutical company and so to us, it is the best deal ever within the insurance sector in terms of recapitalisation. This is the best deal ever for the company within the insurance sector in terms of recapitalisation. As we speak, we are at the threshold of N11 billion and are short of inviting the NAICOM to do their verification. We are going beyond this threshold through acquisition of another insurance company.

We have signed a Non-Discolsure Agreement (NDA) with that company and we want to keep it under wrap. But, hopefully, by first quarter of next year, we will be in the threshold of N20 billion in terms of capital base. The asset base will be far in essence of N30 billion based on the projection. The entire structure of Tangerine Life also acquired by Verod will come to Law Union and Rock headquarters. Both the Tangerine Life and Law Union will become the Tangerine LUR through a name change so that we will network properly and we will take advantage of cost optimisation in the management of stuff. So, we are very glad that we got to this level and we are just almost at threshold of completing our recapitalisation, which hopefully before the end of the year, we should be able to ring the bell to say we have fully complied in terms of recapitalisation.

How would the new experience brought in by Verod affect your business?

Yes, it is going to be a tremendous experience. Verod has wide interests in other parts of the economy. It has interests in a pension fund administrator (PFA), Central Securities Clearing System (CSCS), Emzor Pharmaceutical Company, farms and technological companies among others. We hope that we will create a niche in all of these areas to be able to build Law Union to take more advantage of brand recognition and market share. We see Law Union growing in the threshold of 30 to 40 percent even in the first year of Verod’s coming. This is far above the industry’s growth trade, which, last year, was just about 10 per cent for general business and about 29 per cent for life. So, we see Law Union playing above the life business. Because by the time you have ARM Life and the Old Mutual coming together to form Tangerine Life, then we have Law Union and other insurance companies coming to form Tangerine General Business and then we have the PFA, AXA Mansard Pension, we have a microfinance bank, Assured Microfinance Bank, already indicating. We have HMOs coming in. We are rounding up the process of acquisition of two HMOs coming into this fold. With all of these, our goal is to play in the top five within the insurance sector, both in the life and the general business. I can assure you that because of Verod’s flair for business development, the brokers are already keying into us. They are seeing that things are changing in Law Union and they are already coming to support us the more.

How much claims are you paying this year?

Law Union and Rock has made about N1.6 billion in claims and we are hoping that we don’t get above that because the year is almost over. But that is the essence of insurance. We are reengineering our system in such a way that we get to a level that people will get the claims faster than ever before. The process will be seamless and you can monitor how your claims is moving from loss adjusters to claims desk.

I agree with this because agitating for the right technology to solve the problem of rate-cutting and discipline in the insurance industry because there is no amount of appeal we can give to people, that they will ever obey the rule but with technology a platform that can guide everyone that will see whether you’re charging adequately and will correlate with the data you’re supplying to the regulatory authority, that will give the ideal solution to the problem of rate cutting in the industry before the entire industry gets destroyed.

In terms of the issue of using technology, we should use it to aggregate every activity of the industry, including the public sector, because until we get there, we realise that the rule of thumb or the analogue system we’re used to can’t take us anywhere.

– The Nation