Thursday, April 29, 2010

Insurance Industry's Premium traget not likely to be met in Q1.

Uncertainties in the business and political enviroment that characterised the nation in the first quarter also affected the insurance industry, as it was almost impossible for business activities to take full swing.

Operators who had begun the year with high hopes that all things being equal, there  would be growth in insurance business with huge premium income, did not bargain for the political logjam experienced in the country throughout the first quarter.

The insurance sector,  which ordinarily is still struggling to take prime position in the individual  and corporate expenditures, suffered  a set back  as people were not willing to spend monies on products.

Accoording to an industry analyst, many people due to economic and political situation in the country had reasons to  close their insurances, while others did not want to hear about it.

Industry operators are however worried that projection for the year would have been affected by the turn out of event in the first quarter.

Jacob Erhabor, Managing Drcetor, Iinternational Energy Insurance plc, stated in a telephone interview that the first quarter of 2010 was filled with a lot of suspense and uncertainty at the economic and political fronts.

Erhabor noted that as  a result of instability in the political economic, business were paralysed as everyone was in a confused state and not sure of the direction of polity. This is even made worse by the on going reform in the banking industry which created liqudity squeeze, making it difficult for the banks to grant credit to insurance companies, and the impliccation was that economy nose-dived with little or no economic activity.

Insurance, which is a major sector of the economy, according to him, had its fair share of the low activites,  as people contuined to close their insurance takes, and this he pointed out, affected premium generation at the long run.

While he could not make categorical statement about the premium figures, Erhabor said performance of individuals companies, no doubts will less than projected amount, stating that the numebers would become clearer by the end of third quarter.

He however noted that expectations are high in the second quarter since the political situation are gradually easing up as expected with the newly sworn-in minstries. Expectations are high with the changes in the polity and immedaite boost in economic activites.

Adeyemi Adejumo, Managing Director, Continental Reinsurance plc, told the BusinessDay that for the reinsurance market, the first quarter was quite dull as things did not pick up as expected.

He said that the uncertainty in the nation polity was not favourable to business as most people adpoted a kind of vait-and see approach, and so spending on insurance was affected.

According to him, the insurnacce industry may not like/meet it premium target in the first quarter but definitely would make more than half.

He however maintained that things were beginning to look up again  with the settling down to office the acting Preseident and the swearing in of new minstries.

He was however quick  to add that defining dircetion of the economy is critical to the growth of business, as this would be considered very seriously by the foreign investors.

We want confidence restored in the economy, particually for most of us who have foreign investors in our companies, Adjumo stated.

In addition, Larry Ademeso, managing director, Royal Exchange  Prudential Life, however differed in his assessment of the economy. saying that life specialist  companies witnessed some growth as result of the signing of group life insurnace at the federal civil servics level.

Although he could not be  cerrtain about the industry figures, he noted that his organisation met the first quarter target as the general business company traded on more difficult environment because of the reforms in the banking industry.

On future outlook, Aemeso said '' its still peace of the grave yard'' as no one is certain of about the direction of the economy, and with election coming next year, there is likely to be tension. Except there is genuine electroal reform in the country, not much will happen in terms of good business, he noted.

 

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