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Eddie Effekoha, MD/CEO, Consolidated Hallmark
Those who have suffered the after effect of cheap goods or services have ever lived to regret it and this is what many insurance consumers will soon by continually asking for unimaginable discounts on price of policies or dealing with companies that out of desperation want to give their covers at any cost.
Those who have suffered the after effect of cheap goods or services have ever lived to regret it and this is what many insurance consumers will soon by continually asking for unimaginable discounts on price of policies or dealing with companies that out of desperation want to give their covers at any cost. The old saying that “cheap food dey run belly” is true and will be the cry of those who push for excess discount. By that time, the other saying that to whom less is given less is expected” would now apply.
The essence of insurance is that the insured is returned to his original state or something close to it by his insurance company after suffering a loss. The ability of an insurance company to meet its claim obligation to the insured at the time of loss justifies the need for taking insurance. The claim is paid from the pull of funds accumulated in the form of premium paid by different insured’s. This is otherwise called insurance fund and measures the strength and stability of an insurance company.
BusinessDay finding shows that many insurance companies out of desperation are taking risk at ridiculous prices which undermines the essence of the whole practice. A story was told of an insurance consumer who persuaded for a 70 percent discount on a comprehensive motor insurance for a Honda Jeep. The purchasing price of the Jeep was said to be N2 billion and insurance is 10 percent of purchase price, amounting to N200,000.00. After the discount, the client was said to have paid just N60, 000.00, indicating a 70 percent discount. Three months after, the car was snatched by robbers at gun point and the client ran to his insurer for claim. The story was that of cheap insurance. Why want to be a victim?
Experts are of the view that if you believe in insurance pay for it and when you don’t believe in it forget about it.
Eddie Effekoha, managing director/CEO, Consolidated Hallmark Insurance plc said that ruling price war which was expected to have ended with the last recapitalisation in the insurance industry was still very much in practice.
According to him, what is being witnessed is a state of intense competitive rivalry among industry operators, where practitioners in the different arms of the industry continue to undermine the very fundamental principles that make insurance a profession.
He pointed out that these are days of multilateral series of price reductions, not necessarily based on logic or business sense, but rather in an attempt to edge out the competitor.
Effekoha said the practice of price wars would only favour consumers in the short run because they will take advantage of the lower prices to take insurance but in the long run they would be the losers because the industry would have become so weak that it can longer play its role actively or grow capacity to match global standards.
We are indeed the laughing stock of the international market, even though they have been the ones also using us against ourselves and we the practitioners are greater losers unless we get put our acts together and collaborate, he said.
Paschal Egerue, managing director, Afribank Insurance Brokers Limited who observed that the trend had reduced since the number of operating companies in the market came down, said the practice is not in any body’s interest.
He noted that a major challenge facing the industry is making the insured appreciate the need and benefits of insurance as that would encourage them pay the right price so that claim can be paid with ease.
According to him, even though it is in the character of the buyer to ask for discount in any purchase, people should realise that there is a day for claim. He however accused operators of the desperation in trying to secure business, stating that the long term effect would not help the market.
Wondering how a consumer and an insurer would agree to take a motor insurance at 70 percent discount, he blamed the Nigerian Insurers Association (NIA) for not doing any thing to address the ugly trend.
Egerue charged the NIA to enforce its members to do deceleration of polices so that it could easily discover rate cutters can easily be fished out.
The essence of insurance is that the insured is returned to his original state or something close to it by his insurance company after suffering a loss. The ability of an insurance company to meet its claim obligation to the insured at the time of loss justifies the need for taking insurance. The claim is paid from the pull of funds accumulated in the form of premium paid by different insured’s. This is otherwise called insurance fund and measures the strength and stability of an insurance company.
BusinessDay finding shows that many insurance companies out of desperation are taking risk at ridiculous prices which undermines the essence of the whole practice. A story was told of an insurance consumer who persuaded for a 70 percent discount on a comprehensive motor insurance for a Honda Jeep. The purchasing price of the Jeep was said to be N2 billion and insurance is 10 percent of purchase price, amounting to N200,000.00. After the discount, the client was said to have paid just N60, 000.00, indicating a 70 percent discount. Three months after, the car was snatched by robbers at gun point and the client ran to his insurer for claim. The story was that of cheap insurance. Why want to be a victim?
Experts are of the view that if you believe in insurance pay for it and when you don’t believe in it forget about it.
Eddie Effekoha, managing director/CEO, Consolidated Hallmark Insurance plc said that ruling price war which was expected to have ended with the last recapitalisation in the insurance industry was still very much in practice.
According to him, what is being witnessed is a state of intense competitive rivalry among industry operators, where practitioners in the different arms of the industry continue to undermine the very fundamental principles that make insurance a profession.
He pointed out that these are days of multilateral series of price reductions, not necessarily based on logic or business sense, but rather in an attempt to edge out the competitor.
Effekoha said the practice of price wars would only favour consumers in the short run because they will take advantage of the lower prices to take insurance but in the long run they would be the losers because the industry would have become so weak that it can longer play its role actively or grow capacity to match global standards.
We are indeed the laughing stock of the international market, even though they have been the ones also using us against ourselves and we the practitioners are greater losers unless we get put our acts together and collaborate, he said.
Paschal Egerue, managing director, Afribank Insurance Brokers Limited who observed that the trend had reduced since the number of operating companies in the market came down, said the practice is not in any body’s interest.
He noted that a major challenge facing the industry is making the insured appreciate the need and benefits of insurance as that would encourage them pay the right price so that claim can be paid with ease.
According to him, even though it is in the character of the buyer to ask for discount in any purchase, people should realise that there is a day for claim. He however accused operators of the desperation in trying to secure business, stating that the long term effect would not help the market.
Wondering how a consumer and an insurer would agree to take a motor insurance at 70 percent discount, he blamed the Nigerian Insurers Association (NIA) for not doing any thing to address the ugly trend.
Egerue charged the NIA to enforce its members to do deceleration of polices so that it could easily discover rate cutters can easily be fished out.
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