Government Chairman, Purebond Insurance coverage Brokers Restricted, Mr. Simon Okeke, has over three a long time’ expertise within the insurance coverage business. Previously managing director/CEO of Central Insurance coverage Firm Restricted, Okeke, is a member of the Council of Fellows of the Nigerian Council of Registered Insurance coverage Brokers and an affiliate of the Chartered Insurance coverage Institute of London. Okeke had in late 2000 based Souche Insurance coverage Brokers unLimited, which metamorphosed to Purebond Insurance coverage Brokers Restricted in 2011. On this interview with Kunle Aderinokun and Bamidele Famoofo, he speaks on the current growth within the Nigerian insurance coverage business and addressed pertinent points within the pension scheme, asserting that the specialization of Purebond Insurance coverage Brokers in particular dangers, oil and gasoline, engineering, gasoline pipeline building and aviation insurance coverage broking, amongst others, has positioned the corporate within the league of outstanding and indigenous skilled broking considerations. Excerpts:
When did your journey into the insurance coverage world start and the way has it been to this point?
I began my Insurance coverage profession as dealer in 1986 with United Trendy Insurance coverage Brokers and latter joined Crusader Insurance coverage firm in 1987 as an underwriting superintendent earlier than the corporate closed its common enterprise in 1989 to stay a specialist life workplace. The life workplace was ultimately taken over by a bunch of buyers, who modified its identify to Custodian and Allied Life Assurance Firm.
I take into account myself exceptionally favoured when throughout the Crusader interview; l emerged one out of the 2 administration trainees that scaled via the rigorous assessments that weeded out 133 candidates. In addition to being an underwriter, my aptitude for advertising and marketing stood me out in my profession as l contributed to the expansion of the gross earnings of the corporate and plenty of others that l labored for thereafter.
As a workers of Crusader Insurance coverage, l labored in numerous departments headed by the present governor of Osun state, His Excellency, Mr. Adegboyega Oyetola, which embrace common insurance coverage, re-insurance and motors and many others. In 1989, the corporate wound down the side of its common insurance coverage enterprise due to its cyclical progress sample and settled down for the life enterprise that provides a extra steady optimistic progress graph and higher returns.
Nonetheless, l was among the many few workers retained by the corporate to wind up the final enterprise unit of the corporate. Whereas this was occurring, l certified in 1990 as an affiliate of the Chartered Insurance coverage Institute of London and that gave me the leverage to hunt employment elsewhere. It’s because l don’t wish to be contained within the life assurance enterprise, l have at all times wished to expertise each arms of the enterprise. I bought employed at African Growth Insurance coverage Firm (ADIC) as an assistant advertising and marketing supervisor. The agency was headed by Prof. Joe Irukwu, who’s nicknamed Mr. Insurance coverage of Nigeria. I believed it was a really massive leap for me as assistant supervisor advertising and marketing from a superintendent place. I used to be accountable for all of the brokers in Lagos and components of the nation. My obligation was to coach and in addition lead my workforce to market the merchandise of the corporate. We marketed each the final and life assurance companies in addition to engineering insurance coverage. Engineering insurance coverage is a particular threat arm of insurance coverage that offers with machines, crops, gear or civil works, building of hydro energy crops, gasoline pipeline constructions, amongst others. Particular dangers are similar to engineering, however embrace oil & gasoline upstream actions, whereas life assurance enterprise offers with time period, entire life, endowment, mortgages, annuities pension and associated advantages. Don’t overlook that it was the Nigerian insurance coverage firms that have been dealing with pension schemes as it’s executed in developed economies of the world till 2004, when the federal authorities, out of the ugly experiences that bedeviled the destiny of retirees, determined to open up and regulate the pension enterprise and introduced in overseas buyers to take over the portfolio of pension schemes being managed by Insurance coverage firms. Earlier than then, insurance coverage firms have been each directors and custodians of Pension belongings and liabilities. Nonetheless, due to the lucrativeness of the life assurance and pension enterprise, coupled with the advantages of deposit administrations from massive firms and multinationals, the federal government felt it was kind of one thing that may be managed by specialist directors with the banks appearing because the custodians. The PFAs now needed to work with Pension Fund Custodians (PFCs).
The Nationwide Pension Fee emerged on account of this growth to control these operators, who make investments the common financial savings collected from contributors within the authorities and the organised personal sector of the Nigerian economic system. PenCom has amassed a lot cash from contributors. We ought to be speaking about over N9 trillion pension fund being managed by Pencom via the appointed custodians. This isn’t a small amount of cash. You may think about what would occur if insurance coverage firms are managing such fund. There’s, nevertheless, a regulation that governs the funding of pension fund. At the moment, pension belongings are channeled into the next sectors: actual property properties, quoted atypical shares, FGN and state authorities bonds, company debt securities, cash market securities, personal fairness funds, infrastructure and open/shut funds. The underlying caveats in these channels is that of convertibility of the funding, in case the necessity arises or money name, the fund will simply be out there to fulfill pension obligations.
I’m of the view that PenCom laws are work in progress as a result of there are lots of dashed hopes within the space of harmoniously and proactively full the verifications of pensioners with the first motive of the thrift or contributors of the fund. Don’t overlook that the contributory pension scheme permits a contributor to entry as much as 50 per cent of the steadiness within the RSA to 50 years outdated, however attributable to some anomalies within the reforms, a contributor could be delayed till age 60 or extra. They need to be allowed to attract 50per cent of their cash to start out a enterprise of their very own whereas the remaining is transformed into annuity. It permits the contributor to attract from his/her financial savings in perpetuity. If loss of life doesn’t happen, the profit continues because the financial savings attracts curiosity.
What side of the Pension Reform Act 2014 would you wish to be amended to create a level-playing discipline for each the pension directors and the insurance coverage business?
I wish to have a look at the Pension Reform Act 2014 from two angles. One is the operation or administration. Of the pension itself and the supply of the Life Assurance element that pays three x annual wage for loss of life in service earlier than retirement. Following the Pencom Act 2004 that turned efficient 2005, few life insurance coverage firms indicated curiosity to use as directors or managers allowing for their current clientele base. There’s a central subject within the current regulatory framework, because it pertains to the advantages payout to the property of workers, who die interstate. Additionally there are situations, the place any individual dies after creating his/her will, some administrative encumbrances within the system are inclined to frustrate the dependent relations as sure particulars that ought to have been extracted from the deceased information are by no means up to date or accomplished, and that hinders cost to the would-be beneficiary. To be particular, in a scenario the place a named beneficiary dies, there ought to be a provision for the subsequent beneficiary, who may present a proof of claims to be given undeterred entry to have the ability to declare his rights, however that is still an enormous problem as we focus on. I’m taking a look at it from the standpoint that the regulation or reform that has been made ought to tackle the difficulty of the administration of the pension fund. It ought to enable the PFAs to present perception as to the best way to channel the funding of the fund. It ought to be channeled into the assured sectors of the economic system as I discussed earlier the place there can be no liquidity points when the fund is badly wanted.
Authorities borrow from the pension fund for political and white elephant initiatives reasonably than in infrastructure that may create wealth via employment and this l take into account as fairly unhappy for the business and the economic system at massive. Allow us to take into account, if authorities had borrows to renovate, for instance, the deserted Federal Secretariat at Ikoyi, Lagos State, and commercialise it, don’t you assume it would yield a great return for the nation? There are many firms looking for good workplace areas in Lagos, which the placement of this construction offers. Secondly, the pension managers themselves have no idea how the funds are being generated and due to this fact enable political and authorities affect to find out funding route. This doesn’t meet the unique goal of setting cash apart by the contributors.
It might seem that the contributors are caged below this current association within the pension scheme as their possibilities to entry their advantages after they want them are slim. They need to look ahead to a really interval and the procedures are lengthy. Are there no methods this may be improved upon?
Like l mentioned earlier on, the contributors usually are not the federal government, however folks, who’ve determined lawfully to maintain a sure portion of their very own cash for the wet day, as a result of thrift is the very essence of each progressive particular person, firm and even state. Nigeria operates the contributory pension scheme. If any individual has contributed for a while, say 35 years earlier than retirement, at 60, he’s presupposed to be given 50 per cent. Actually, the day the particular person is retiring ought to be when his/her account ought to be credited. I don’t see what that you must confirm to pay into the account of the contributor. He/she wants his/her cash to have the ability to begin a brand new life. You’d realise that most individuals die after retirement as a result of they don’t have any hope. However when they’re assured that after they retire, there’s something good forward, they reside longer. I’ll even suggest that three months earlier than retirement, the cash ought to be paid into their account. There must also be pre-retirement workshops organised by each the organised personal sector and public organisations to point out folks the best way to handle their monies earlier than they retire, figuring out that managing cash is a distinct drawback all collectively.
If these occur, l will inform you that folks will retire with a stage of confidence, however whereby this cash is caged, they’re disadvantaged of accessing their very own fund. In case you are disadvantaged, what then will it’s important to do contemplating the large duties ready forward? The steadiness of 50 per cent is stored in type of annuity, in order that even if you find yourself doing enterprise with the majority you bought, you might be nonetheless entitled to a pension on month-to-month foundation. However, when loss of life happens earlier than retirement, thrice the annual wage is predicted to be paid to the household of the deceased because the fund turns into robotically matured. However there are two potentialities right here. It’s both directors pay it out in bulk to the household of the deceased or unfold it out in type of annuity for the beneficiary, relying on their alternative.
To what extent has the withdrawal of the pension fund portfolio affected the Insurance coverage business in Nigeria?
It has in no small measure affected the business as a result of that is cash taken away from gamers within the business. After all, you don’t have any energy to say no to what the federal government says. Authorities says switch the pension belongings to the PFAs and if you wish to develop into one, register. The transition continues to be operating so far as l’m involved. In 2005, so many PFAs got here in from all around the world. A few of them are now not in existence as they can’t handle the pension belongings. They might not survive as a result of Nigeria has a peculiar means of doing issues.
What are the prospects of the pension business in Nigeria?
The business has an enormous and vivid prospect within the nation given the inhabitants, and particularly the rising inhabitants of youths. However the problem is unemployment. There’s a optimistic correlation between employment and pension fund improve. That to a big extent implies that a rich nation has a robust workforce. You’ll observe that migration from Nigeria has elevated the workforce of the international locations the place our folks go looking for greener pastures. They go there to type the workforce and what they go away us with is the creation of pension legal responsibility not asset. Nigerians improve the pension belongings of these different international locations.
May you do a quick assessment of the insurance coverage business in Nigeria?
I might say that the insurance coverage business in Nigeria has come of age. Do not forget that the primary insurance coverage firm in Nigeria, which is over 100 years outdated as we speak got here into the nation below the Royal Niger Firm as an company workplace. Since then, there was a trajectory of improvements, institutions and indigenisation of Nigerian insurance coverage business and far has occurred since then. At the moment, we function and are ruled by the Insurance coverage Act of 2003. We name it NAICOM Insurance coverage Act. Insurance coverage has had its worse instances and is popping out of the woods. And l will say the most effective factor that NAICOM did to vary the sport was to implement the sections of the Act that offers with company governance and establishment of world finest practices amongst others. One of many provisions of the Act that claims ‘no premium, no cowl’. Prior to now, folks can subscribe to insurance coverage contract and refuse to pay even one yr after. You can not drive him to pay. However the reality is that there isn’t a cowl whenever you refuse to pay your premium. So, from 2011 as much as 2013, it turned a deal that in case you don’t pay your premium, you received’t have any cowl. This has actually helped the insurance coverage business because it turned operational. Among the evidences of the change are that the majority insurance coverage firms at the moment are homeowners of their very own properties in type of head workplaces. They now even have cash to purchase sufficient re-insurance to again claims on liabilities. The NCRIB is equally making insurance coverage to be higher and patronised.Using registered insurance coverage dealer in each insurance coverage contract delivers peace of thoughts as he takes time to interprete the tiny clauses within the each insurance coverage contract. Coming into into any insurance coverage relationship with no registered insurance coverage dealer is tantamount to getting into a court docket to defend your self with no lawyer. Involvement of insurance coverage brokers within the business has a optimistic correlation with the quantity and high quality of enterprise being executed as we communicate. The capability of the business is starting to develop as a result of premium is coming in larger volumes than it was once.
What impression do you assume the on-going recapitalisation plan, ordered by NAICOM may have on the business?
Thanks very a lot for this query. You already know the insurance coverage business is the one arm of the Nigerian economic system that ensures progress as they supply the required monetary backing within the occasion of unexpected circumstances or disasters. So that you can play as a threat supervisor or sound insurer, it means it’s essential to possess the monetary capability to offer for the required dangers that may come up in the midst of your small business. So, what NAICOM noticed that prompted it to return out with this coverage was that so many gamers within the business function on low capital with a gentle rush of capital flight. What they need them to do now’s improve their threat acceptance capacities and create underwriting income. The abstract of the recapitalisation are as follows: A common enterprise insurer whose capital was N3billion will now make it N8billion, A life underwriter will improve from N2billion to N8billion whereas the composite firm (Life and Basic) will transfer from N8billion to N18billion. The Re-insurers will transfer their base from N10billion to N20billion. The implication of that is that the quantity of enterprise being generated in Nigeria will likely be retained extra as a result of the business is severely campaigning for deeper insurance coverage penetration. At the moment, insurance coverage penetration is as little as lower than 2per cent. With the emphasis on the convenience of doing enterprise and sound adequacy of re-insurance cowl, we might positively be on the fitting course to cut back capital flight. Recapitalisation will assist the business as a result of there would sufficient capital for operators to do enterprise, settle all real claims which can in flip enhance confidence amongst premium payers.
Will the gamers be capable to increase the required fund for recapitalisation or ought to we be wanting ahead to collection of mergers and acquisitions?
As it’s proper now, no firm goes to go down due to the best way the recapitalisation is structured. It’s because it permits for any gamers to repair itself within the class it belongs. For those who belong to any of the bands, you can be restricted by what your capital permits to do. However past this, in enterprise, you don’t wish to stay the place you might be. You wish to be a line crosser and so that you can try this, it’s essential to have the motive to do larger enterprise. This transfer will encourage each native and worldwide buyers to convey fund into the business as is at the moment being forward of the June 2020 deadline. For the aim of recapitalisation, NAICOM gave them up until June to substantiate their readiness to proceed to play both of their present stage or at an even bigger stage. I’m inspired to let you realize that the majority the insurance coverage firms have indicated their readiness to recapitalise. They’re saying that they’re positive to fulfill up with the NAICOM’s necessities to lift their capital base. I see them elevating funds via Rights Points from their shareholders, outright IPOs or every other hybrid funding choices. Mergers could happen, however I don’t see acquisitions. I imagine that the facility of two is bigger than that of 1. If two firms which have N10billion every mix, they’ll increase N20billion to be extra succesful in doing bigger dangers and play within the upstream sectors of oil and gasoline business.
Are you able to discuss in regards to the brokerage business in Nigeria?
The brokerage business is the skilled arm of the insurance coverage enterprise in each vibrant economic system of the world. There isn’t a insurance coverage enterprise executed in Nigeria that’s executed with no brokers’ enter. A minimum of 60 per cent of companies underwritten in Nigeria go via an insurance coverage dealer. The remainder goes to those that will get the enterprise straight or by affiliation with banks. Although NAICOM has requested banks to divest from insurance coverage, a few of them nonetheless have captive accounts. A captive account refers to companies that come from the banks to the insurance coverage firms straight with out going via a dealer. Even brokers themselves have their very own captive as is synonymous in enterprise. Nonetheless, the brokerage enterprise in Nigeria has come a great distance. The optimistic growth within the brokerage business began after the NCRIB, which is the skilled physique for insurance coverage brokers, turned an autonomous physique. That occurred over 50 years in the past and we’re nonetheless waxing stronger. We’re the professionals that organize the chance profiles of each entity be they authorities or organised personal sectors. They’re the skilled intermediaries that guarantee seamless insurance coverage bundle for his or her purchasers. They’ve a greater understanding of insurance coverage technicalities and perceive the strengths and weaknesses of insurers, if any, and are in a greater stead whereas advising their purchasers. The dealer additionally spells out the phrases in each insurance coverage deal. They do the chance survey, advocacy and handle threat profiles of their purchasers via intermittent opinions and coaching of their purchasers’ workforce. Above all, they render these providers with out charging any payment besides their brokerage commissions derivable from the discounted and decreased premiums purchasers pay via them.
The dealer assist the consumer with the technicalities of the enterprise and in addition clarify and advise him on the suitable steps to take. When you appoint a registered insurance coverage dealer to deal with your insurance coverage offers, you would possibly go and sleep with each eyes closed. You pay much less whenever you undergo a registered insurance coverage dealer. Please take observe that brokers and never brokers, are loyal to their insurance coverage firms who appointed them.
Inform us in regards to the motivation behind the creation of Purebond Insurance coverage Brokers Restricted.
Purebond Insurance coverage Brokerage Restricted began in 1995 as Souche Insurance coverage Brokers limitless. Then l was working in a paid employment, however l had a imaginative and prescient to make a reputation for myself within the insurance coverage business. It’s because after I advised my household about my resolution to check insurance coverage, out of sheer ignorance, l was despised. They wished to know why l didn’t select to develop into a medical physician, an accountant, an engineer or perhaps a lawyer. Their perception was that no severe minded particular person needs to make a profession solely to finish up ridding a vespa or scooter as was seen in my city at the moment. However l was bent at making a profession within the business and so, l struggled to sponsor myself via the course. In the midst of my profession within the business after graduating from faculty, l found l had lots of potential for advertising and marketing. After I joined the mainstream of insurance coverage at Central Insurance coverage after l left ADIC, l made up my thoughts that the best way to go is float a enterprise in insurance coverage brokerage. I knew the corporate l integrated a yr after l turned AGM, advertising and marketing will work for me. So, by 1998, after my promotion to the rank of managing director, we purchased an organization that had licence to function since we had no licence. I known as the brand new entity Souche Insurance coverage Brokerage Restricted, however later we determined to name it a reputation that may have worldwide enchantment, therefore the selection of Purebond Insurance coverage Brokerage Restricted. We’ve got prime quality purchasers. They aren’t many however they’re of very prime quality. We’re already considering of constructing our personal workplace in a distinct segment location in Lagos after 25 years of arduous financial savings and really quickly, we might be there.