What operators must do to sustain growth of insurance stocks

Experts have continued to emphasise on the need for operators to reorganise their internal mechanism to conform to global standard.

Fola Daniel, commissioner for Insurance had said that the industry cannot afford to go back to its old self, stating that operators must put on their thinking cap to sustain this growth, particularly its share price on the stock market.

He said that the trend at the capital market in recent times and expanded scope of insurance activities show that the industry will not only drive economic growth but be on the front burner of the Nigerian economy in the nearest future.

Chris Oshiafi, managing director, Spring Capital, said in order to continue to savour the gains made over the past one year, operators and practitioners must work tirelessly to consolidate the achievement and work towards strengthening their internal mechanism to the expectation gaps of the new stakeholders and particularly, the investing public.

Daniel said that attention must be paid on the issue of adherence to corporate governance and effective board, stating that emergent leadership the of board of insurance firms must commit themselves to sound corporate governance principles. "They must discharge their fiduciary duties responsibly to all shareholders and regulators alike."

Another important step that needs to be put in place, he said, is good IT platform and efficient operational process.

According to him, strategic investment must be made in I.T. to reduce transaction and operational cycles, stating that these are the key elements that will drive growth and create differentiation in the minds of the insuring public in future.

Oshiafi also emphasised on the need for quality manpower, pointing out that in order to achieve a sustainable performance over the long term and to effectively deploy the resources now at its beck and call to create value to shareholders, operators must evolve strategies to deal with manpower problems.

"More than ever before, there is the need to tackle the problem of innovation and imagination in insurance industry and like the banking sector, Underwriters must leverage on diversified products offering to sustain growth".

They must look into growing areas of the economy and come up with products to target that particular market, he said.

He observed that a look at the financial report of most insurance companies still show that they make more money from their non-core activities, calling on managers to get creative by coming up with new products. "Operators should begin to explore ways of packaging micro insurance products for the huge informal sectors where the largest percentage of the populace acts as economic agents".

The Spring Capital boss noted further that practitioners must be able to deal with the issue of negative perceptions and win back public confidence through branding and globalisation.

"This is with a view to improving on the industry’s brand equity and some of the strategies to achieving this are timely claim settlements and increasing public enlightenments of insurance products and benefits."

"Further to the above is the need to benchmark global best practices to enable us compete on the global scale if Nigerian firms must take their rightful place in the emergent insurance industry in Africa and global, he said.

To strengthen public confidence and perceptions in the new emergent insurance sector and in deciding on who gets the big ticket transactions in the corporate world among insurance firms, he said that operators must be ready to open their doors to be independently assessed by external parties, the rating firms because rating "would be one of the unique selling points in our future marketing drive."