The planned recapitalization of the insurance industry is likely to wait as operators struggle to pay claims resulting from the #EndSARS protests. Banks are already sending claims request to insurers to cover their losses. Insurers are facing their biggest claims on record after protests against police brutality turned violent, leading to large-scale looting and destruction.
The insurance industry claims rose 35 per cent to N252 billion in the last two years, and are expected to rise further this year due to the impact of the protest and the destruction of private and public properties by hoodlums. Chairman of Nigeria Insurance Association, Ganiyu Musa, said risk underwriters all over the country are inspecting business sites and verifying claims following loss notifications from big and small companies including banks, retailers and hotels.
“The losses will certainly run into billions and billions of naira,” the head of the insurance industry body said by phone from Lagos, the nation’s commercial hub. “Not sure we’ve had anything of this magnitude.” Other stakeholders said the surge in potential payouts threatens to further delay efforts by the regulator to boost capital buffers so insurers are better prepared for shocks. The National Insurance Commission in June postponed a deadline for the recapitalization of the industry by nine months to the end of September next year following the coronavirus pandemic.
Clashes between Nigerian youths and security last month claimed dozens of lives as mobs invaded shopping malls, businesses and police stations, burning cars and buildings in their wake. Cumulative claims will probably outstrip previous payouts in the West African nation, the majority of which have been incurred due to fires, Musa said.
Although exact claims are still being worked out, the industry association’s members are confident of meeting their obligations by drawing from their reserves and seeking help from re-insurers, said Musa, who’s also managing director of Cornerstone Insurance Plc.
“Typically you have 100s of claims coming out at the same time,” he said. The exact damage will be known “in the weeks and days ahead.”
The insurance association plans to use the fallout from the protests to increase awareness in the nation of about 200 million of covering their assets against potential losses. It targets doubling penetration in the next five years from less than one per cent, by improving the timeliness of settlements, and working with authorities to enforce compulsory policies like motor insurance, according to the industry head.
“There’s a lot of opportunities for growth,” Musa said. “If you are a long term investor, the temporary challenges from Covid-19 and the protests can’t significantly affect the fundamentals of the industry because we have built sufficient reserves and have risk management in place.”
