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We need to increase local capacity to curb capital flight – Muktari

We need to increase local capacity to curb capital flight – Muktari

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In this interview with NIKE POPOOLA, the Group Managing Director, Royal Exchange Plc, Alhaji Auwalu Muktari, speaks on factors affecting the growth of the insurance sector

What is responsible for the slow pace of insurance growth in the country?

Lack of insurance awareness; low capital of the Nigerian populace and the level of income have really affected insurance. In our country of over 170 million people, we cannot boast of even more than one million Nigerians taking insurance as of today.

So a lot needs to be done by the industry, the regulators and the individual companies, to create awareness and ensure that we get to the grassroots and bring in products that are readily available in the market.

At the end of the day, if you can get five to 10 million people to do insurance, I think we will definitely improve on the Gross Domestic Product of the Nigerian economy. And I want to assure you that the level of penetration will be one of the best in Africa because of the size of the population within the Nigerian insurance market.

The use of technology will assist the industry greatly in ensuring that we get to the common man to know what insurance is all about and get him to buy one form of insurance or the other. It has been tough over the years but I think we are getting to the end of the road where things will turn around and there will be positive responses from the Nigerian populace.

In years past, the industry came up with projects to drive growth but not much was achieved. How can future growth projects be enhanced?

The issue is that industry operators need to take responsibility. We should not rely only on government or regulators for enforcement. There is a limit to what regulators can enforce but industry stakeholders should take responsibility and ensure that we get into the market through effective visibility and bring products that are readily available and affordable to the insuring public. We should be ethically doing business so that at the end of the day, it will be clear to the people that the industry really has integrity.

Apart from these, we must use technology because there is nowhere you don’t have telephone handsets. You now see people using their WhatsApp, twitter, Facebook even in remote places and with all these social media; we need to create conscious awareness of the products that are available in the market. Sometimes, people want to buy but they don’t even know that the product exists.

These are some of the challenges we are having and that is why the initiatives failed. That is why I am recommending that industry players should take initiative and use this to get people aware of the importance and benefits they can derive from it so that they can purchase them.

Royal Exchange was the first insurance company to commence operation in Nigeria 100 years ago. How would you describe your evolution in the insurance industry in the past century?

It is a milestone that only very few companies have achieved not only in Nigeria but all over the world. Getting to 100 years must be seen that you are doing something right. I want to say it that despite the challenges in environment within which we operate, the company is being repositioned to live for another 100 years and beyond.

The industry is getting support; the regulators are waking up to support the industry in terms of ensuring that there is good visibility, bringing in new products and opportunities into the industry, and the coming of technology which is the driver.

If you don’t employ technology, you are definitely going to be extinct in business in the next five to 10 years. Royal Exchange is focusing on insurance to ensure that we are fully a technologically driven company in the next two to three years so that we can live for another 100 years and beyond.

Why are you relocating your head office?

We are trying to consolidate our programme into a one-stop shop. We are relocating our head office to 31 Marina, Lagos. The renovation that is going on there today has taken a lot of time which was not envisaged.

Hopefully, we are working towards actualising this dream in this third quarter. Once the renovation is completed, we should be off and getting ready to storm the market and start celebrating the 100 years of our dear company.

Going forward, what’s your vision for the company?

My vision is that the company should be technology driven and operate a paperless office so that we can focus on another 100 years and beyond, and take Royal Exchange back into its real position as the best and the foremost insurance company in Nigeria in terms of the gross premium income, in terms of service delivery, professionalism and profitability and exceed expectation of all stakeholders and ensure adequate returns to our shareholders.

What are the qualities that had preserved the brand for 100 years?

It is keeping to the ethics of the business, ensuring that we deliver effective services to our customers and we keep in touch with them. We maintain professionalism in our businesses and ensure that we always maintain professionalism and give the best of service to our dear customers.

We keep on focusing on product development and research and ensuring that we give the best to our clients and the insurance industry in Nigeria.

The company has been involved in payment of large claims. How would you describe your capacity?

That is being professional. Insurance is a business of settling claims. So we cannot shy away from our claims. There are large and small claims that come but we are in business to settle claims.

Being professional is that we are adequately covered and protected by having a sound reinsurance arrangement by getting liquid and strong reinsurance arrangement as back up.

We are always conservative in ensuring we have reinsurance treaty in all the classes of business that we underwrite so that at the end of the day, the company will continue to operate no matter the effect of claims on the company.

So the reinsurance arrangement is always good. It has always been professional and we have very solid reinsurance that is backing the company year in year out in all aspects of insurances.

In the area of oil and gas, we have a very robust arrangement. We have good insurance companies in all other areas of underwriting, general businesses and life. We also have both local and international reinsurance that are backing this company with very good, sound and adequate professional reinsurance treaties.

How are you preparing for the Risk Based Supervision of the National Insurance Commission?

We are getting set and prepared for it. We are looking for investors to come into the company. We have gone far in discussing with very few investors. We have almost concluded but I want to ensure we are set and we are focusing on ensuring that the RBS capitalisation will not take us unaware. We are being proactive in ensuring that we are adequately capitalised before the period.

How has Royal Exchange grown from insurance to other financial services?

After the recapitalisation of 2007, we founded the company with group holding structure and since 2008; we have come up with a holding structure which metamorphosed into five different companies as subsidiaries of the holding company which is called the Royal Exchange Plc. We have the biggest which is the Royal Exchange General Insurance Company; followed by Royal Exchange Prudential Life; then we have Royal Exchange Finance and Asset Management Company Limited and we have the Royal Exchange Healthcare Management Organisation which is an HMO that provides health insurance facilities. We also have a microfinance bank which serves small and medium business scale enterprises in terms of ensuring micro banking facilities is given to traders.

We are also focusing on bringing in additional subsidiaries to the structure. We are currently discussing with NAICOM on obtaining a licence for the ‘takaful’ insurance company. There is a timeframe for insurance companies to abandon micro side of their insurance businesses and then obtain a licence for micro insurance. We are looking at both options to see if we can obtain a licence for that. The subsidiaries have all been fully doing very well.

Would you say the guidelines on local content have enhanced indigenous firm’s participation in the sector?

That has been done but there is greatly need for improvement still because of the lower capacity in the industry. We still cede a lot of these risks abroad despite the local market because of inadequate capitalisation. I think the coming of RBS will improve the retention of all these businesses within the local market and that will improve the GDP within the Nigerian economy.

What’s your advice for the insuring public?

My advice to the insuring public is that they should embrace insurance. Insurance is the easy way to ensure that you grow your investment when misfortune happens; so you don’t rely on family and relatives to support you if anything happens to your business or whatever.

A lot of people lose their investment without insurance and from there, they become poorer and they cannot start their businesses again. So, insurance is key and is the way to go to ensure that you live happily and when you retire, you enjoy your retirement with adequate and protective insurance.

The insurance industry in Nigeria has come to stay. We are trying our possible best to see that we take insurance to the grassroots. We look forward to the support of every member in the industry to ensure that we achieve the objective of getting to the grassroots and improved GDP and premium income.

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