Insurers look to 2018 budget, policies for growth opportunities
by Modestus Anaesoronye
February 28, 2018 | 12:41 am| | | Start Conversation
As stakeholders in the economy expects passage of the 2018 budget amidst policies of government hopped to bring stability post-recession, insurers are confident that its role will still be needed in key implementation areas.
According to the industry, economic recovery and long term prosperity cannot be achieved if insurance is not given its prime place in government policies and decisions.
“Though economic recovery is still fragile, most economic agents remain upbeat and optimistic, says Biodun Adedipe, managing partner, B. Adedipe Associates Limited.
Adedipe who presented the lead paper at the Chartered Insurance Institute of Nigeria (CIIN) Business Outlook Seminar held in Lagos with the theme “Economic Policies of Government in 2018: Issues, Challenges and Prospects” said: “The Nigerian economy can still get into trouble if government does not give more serious attention to strengthening the non-oil sector to truly diversify foreign earnings and reduce reliance on imports consumption.”
According to him, opportunities however, exist in every space of the Nigerian economy looking at the sectoral contributions to the GDP, stating that, what will then matter is the ability to identify the opportunities and expropriate them.
Adedipe further stated that going forward, it is will be business unusual in insurance, while warning operators to watch out for business disruptions coming from Fintechs.
Funmi Babington-Ashaye, president, Chartered Insurance Institute of Nigeria(CIIN) in her earlier remarks gave the synopsis of the 2018 budget, stating that: “The 2018 Budget of consolidation was designed to build on the achievements of the 2017 fiscal year, in which Nigeria strategically exited economic recession. To further spur on economic activities, the government plans to spend N8.61trillion, while it’s expected revenue from all sources was estimated to be N6.60trillion leaving a funding gap of N2.01trillion.”
According to her, the 2018 budget is largely a deficit budget, implying that government will need to borrow from local and international institutions to augment the expected shortfall in budget.
She however stated that the 2018 budget is not all about negative impact. “The point must also be made that if the current price of crude oil, Nigeria’s main source of revenue, is sustained all year round, the need for borrowing by the government may reduce. This is based on the fact that the budget was predicated on $45 per barrel whereas, the price since the beginning of the year has been above$60.00. With higher revenue, Nigerians should expect better implementation of the budgetary provisions.”
Babington-Ashaye also stated that considering the fact that the government has allocated N181.19 billion to the payment of pensions and gratuities of public servants while N15 billion has also been set aside to meet MDAs’ life assurance premium obligations, the insurance sector should experience increased business momentum.
“On the whole, the Insurance industry, in my view, has more to cheer from the budget. In other words, the business outlook for the Insurance industry is mixed but very promising. As players and risk managers, we need to open our inner minds and take those business decisions that will help us reposition of industry in the unfolding 2018 business year.”
Sunday Thomas, deputy commissioner for Insurance, Technical, National Insurance Commission (NAICOM) in his presentation titled “Insurance And Stability Of The Economy: The Roles Of The Regulator And Strategies For The Future Of The Insurance Industry” said for insurance companies to take advantage of the opportunities in the economy and remain relevant even in the future is looking at what should be expected beyond the present.
According to Thomas, focus by insurers should be more on profitable growth rather than top-line or volume growth.
He said insurers will need to place great importance on professional and disciplined underwriting, to be able to survive in the future.
Others areas of focus according to Thomas include capital management, which he stated is vital to support growth and solvency requirements
“Deliberate plan for human capital development is necessary; Compliance with laws, regulations and directives; and that technology offers insurance companies the ability to act and react more quickly to market opportunities, Thomas advised.
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