Cornerstone Insurance Plc’s underwriting performance continues to deteriorate on the back of rising combined ratios (CR) as the Nigerian insurer recorded a loss in the third quarter.
For the first nine months through September 2017, Cornerstone Insurance posted a loss after tax of N2.11 billion from a loss position of N435.83 million the previous year.
The loss was due to rising claims and underwriting expense as more customers are demanding for claims.
The Nigerian insurer’s CR of 128.67 percent, though higher than 97.86 percent recorded the previous year, has crossed the 100 percent threshold.
A higher CR means an insurer is inefficient and has an inefficient underwriting capacity.
Cornerstone Insurance posted underwriting loss of N622.0 million as against a profit position of N381.65 million recorded the previous year.
The CR is calculated by taking the sum of incurred losses and expenses and then dividing them by earned premium.
The ratio is typically expressed as a percentage. A ratio below 100 percent indicates that the company is making underwriting profit while a ratio above 100 percent means that it is paying out more money in claims that it is receiving from premiums.
Cornerstone Insurance has been introducing innovative products with a view to increasing its e of the Nigerian market.
The underwriting firm offered its numerous customers a free one month cover on motor insurance policy for their loyalty and patronage.
According to the Company, having car insurance is essential because it covers your expenses in the event of vehicle damage or injuries to other drivers, passengers or pedestrians. “All vehicle owners must be insured against their liability to other people, as stipulated in the (Third Party Insurance) Act 1945 (Nigeria).”
“At Cornerstone Insurance, we offer a wide array of pocket friendly Auto Insurance Products, ranging from the compulsory Third Party Motor to Comprehensive.
In its 26 years in the Nigerian Insurance industry, the Company has identified insurance needs and designed tailor made products for its esteemed customers. “Our auto product offerings are third party motor, private motor individual, motor enhanced, auto variants, commercial motor and Uber plans. The auto variants range consists of five bands namely: Compact, Bronze, Silver, Gold and Platinum”.
Cornerstone Insurance total claims expenses increased by 46.21 percent to N3.86 billion in September 2017 from N2.64 billion the previous year.
The underwriting firm’s claims ratio or loss ratio increased to 96.23 percent in September 2017 as against 68.93 percent as at September 2016. This means claims expenses has nearly eaten all of premium income.