It is heartening to know that you will be reading this patriotic motivated external memo in excellent health despite the multi-faceted and unprecedented challenges adorning our dear country from different directions; a situation that would have caused a private organization, notwithstanding the size, to consider filing for bankruptcy. Thank God, we are a country!
From news of the multibillion-dollar court judgement to the decision to determine cases of financial indiscretions by citizens against our country while still focused on the 3-point agenda of your administration, only a robust insurance sub-sector can provide the cushioning effect that will ensure you leave a legacy which will reflect the efforts made considering the circumstance of history. Let me elucidate how this can be.
Forget whatever you have been told about insurance but dwell on this: INSURANCE IS THE ASSURANCE THAT YOU WILL NOT LOSE.
Bearing the above definition in mind, let us together address some of the critical areas that insurance can help but has been left out, albeit inadvertently.
1. Revenue Generation
Your administration has unarguably made greater efforts to improve on revenue generation but it does seem the more successes recorded, the more we are required to do, firstly to sustain it then to further increase it. This is so because there are no insurances in place to provide the buffer for where such remarkable successes were recorded.
Insurance as a wealth protection tool ensures that the identified sources of revenue are secured when the risks associated with them crystallize.
Case of the Petroleum Industry
The petroleum industry, often referred to as oil and gas, which still delivers bulk of our revenue operates with inadequate and expensive insurance contracts that makes it very difficult for players in that industry to repeat some feats. While lots of financial transactions require insurance coverages including guarantees, only the physical assets get covered up to the extent the market, accompanied by some foreign partners, can handle. If these players were confident that in the event of any losses they will be adequately compensated, they will most likely invest more but unfortunately, as of now, they have many unpaid claims that have delayed their decisions.
The problem is not that the revenue-generating agencies have put more pressure on businesses, after all same happens in other climes, but the real problem is that insurance is not actively applied as a tool for resolving some of the challenges faced in the relationship between both sides.
By simply requesting to have and review the insurance coverages of the players in the petroleum industry, you would appreciate the gap between what has been done and what has not been done based on best practice.
Revenues that ought to be generated by the petroleum industry players to enable the Federal Government earn more revenue have been impeded by insufficient adoption of insurance against potential financial losses.
2. Job Creation and Growing the Economy
Job losses, as we have experienced according to national statistics are not peculiar to us, however when job losers do not have a fall back position or job creators are not protected, commonly through insurance, the greater economy suffers stagnation.
Case of Infrastructure Development
The commitment of your administration to infrastructure projects across the country is commendable when viewed from the efforts made to enable diversification of the revenue base. However, the situation where growth is achieved in two quarters and lost in the next quarter can be attributed to the poor adoption of insurance in the activities of both the Federal Government and its economic growth partners.
Consider the power sector and the efforts being made to get stakeholders to take responsibility and commit to the overall objective of increasing access to electricity, missed deadlines and withdrawal of commitments would have been better managed by insurance contracts. There are diverse insurance coverages to proactively curtail the behaviour and conduct of parties which Nigeria needs to adopt, like other advanced economies, in its dealings.
When insurance is only used to cover the assets of projects, we have not done much considering that most of the assets involved in infrastructure development are financial in nature.
We should not be surprised that our employment indices are not changing because whilst the mere announcement of infrastructure projects create jobs, the failure to follow through often causes irreparable losses that reflect on our human development index.
What is the assurance that we will not lose?
This is the question that should guide the decisions of your administration and the answer is, by now, clear.
The state of the insurance industry in Nigeria may seem presently weak both financially and technically but its strength lies in the realization of its potential progressively.
There is a time that is right for one to stand and the others support and encourage for the good of all. I do strongly believe that the time has come for the insurance sub-sector to help the economy grow, and this must be done from the front with the co-operation of other sectors.
I am assured you are insured. No losses.
About The Author
Ekerete Olawoye Gam-Ikon, MNIM, CPP is a management consultant with specialization in Strategy and Insurance. He can be reached vide telephone on +234-806-648-1111 and +234-802-585-0344 or by e-mail vide firstname.lastname@example.org