Against the unguarded practices of pricing coupled with desperation for big risks, a rate template for insurance companies and brokers to work with is underway, according to the Nigerian Insurers Association (NIA).
Eddie Efekoha, Chairman, NIA, told journalists during an interview at the 2016 Brokers’ conference of the Nigerian Council of Registered Insurance Brokers (NCRIB) in Abuja said the brokers and insurers were all involved in inappropriate pricing of risks.
According to Efekoha, “It takes two to tango. Whatever wrongs, whatever malpractices that may be perceived; believe me, all parts and segments of the market is involved.
“And to get out of the norms, I’ll rather think that we will take on them one after another. At the moment, we know that we have not been much disciplined when it comes to pricing our products or services.”
The NIA Chairman, in his believe, described rate-cutting as inappropriate pricing of risks.
“Government has not imposed a rate. It only advised that underwriters should come up with rates, and that is still being collated. When that is done, underwriters will come up with a position.
“I prefer to call it appropriate pricing, because the issue is that if you have been insuring with me for 10years, and you have not made a claim, there is no reason why I should not lower my premium and give you some generous discounts. But; if you have been making claims, there is no reason why I should charge you the same as somebody who has not made any claim at all.
“So, what we need to do right now is to strategize how to bring back that practice. So, that is why the joint committee, made up of NCRIB members and the Nigerian Insurers Association (NIA), came up with a business procurement guideline.
“And because we want some enforcement behind it, we want the National Insurance Commission (NAICOM) to approve of it before the implementation can commence.
“That is, basically, why we are waiting. Otherwise, there is a template to correct the issue of rating so that people who did not get involved in products of risks at the beginning, cannot smuggle themselves in only at the time of placement,” he said.
Citing an example of how the industry can adequately price risks, the NIA chairman enumerated, “To do that, a broker will obtain quotes from insurance companies. And if the quotes are good enough, they are sent to a prospective client. Again, if the client says ‘I am okay with it,’ he or she will then empower the broker to place the business.”
He went on to say that, “Once the broker gets that mandate; he goes back to those insurance companies that provided the quotes in the first instance to do the necessary placements. And we are saying that if you have not participated in that process, you cannot wake up to participate in the placement.
“With that, everybody will quote and quote rightly. That way, we will know the exact loss experience of a given policy and not quote blindly, because what we do most time is blind quoting.”
On the issue of re-resenting the insurance industry well at all times, Efekoha who is also the managing director of Consolidated hallmark Insurance (CHI) said the sector will reel out a guideline that will direct operators to be ambassadors of the industry both within and outside the sector.
According to him, “The market-conduct guideline actually specifies that shortly before the end of this year, underwriters are to submit their rates but that has not been fully practiced or implemented. Once that is implemented; it does mean that; once you have given your rate, you cannot go outside it when you are quoting for any new business.”