The President, Nigerian Council of Registered Insurance Brokers, Mr. Ayodapo Shoderu, says he is troubled by the pervasive incidence and unpleasant trends of rate-cutting, which adversely affecting the operations of insurance brokers.
It is no news that rate cutting in insurance is an age-long phenomenon which had been attributed to fierce competition and competition where available businesses are not enough for the over 50 insurance companies in Nigeria.
Many of the players and regulators including the National insurance Commission had campaigned against this rate cutting practice over the years as it affects the meager insurance contribution to the national income.
It is not surprising that the President of the NCRIB is worried as he said it is regrettable that the council has continued to receive an avalanche of complaints about some ethical brokers losing businesses to those who continually cut rates or quote uneconomic rates. This trend is killing the insurance broking profession and must be condemned in its entirety. It is not killing only the broking profession but the insurance industry in its entirety and the national economy.
Shoderu had at the inception of his tenure, visited the Commissioner for Insurance/CEO of NAICOM, Mr. Fola Daniels who warned brokers that indulged in collecting ‘unauthorised’ commission from insurance companies to desist from the act. But this act continues!
Going forward, Shoderu said the brokers will discuss more intensively with the Nigerian Insurers Association (NIA) with the hope that the forum should be a good platform to initiate steps towards resolving issues of mutual interests.
Shoderu said the council had the intention to continually promote high ethical standards because it remained a way the present group of professionals could bequeath a sound and solid profession to the coming generation.
“I must stress that it will be most difficult for me or the governing board to henceforth defend any member that violates the law or directive on insurance broking operation. To be fore warned is to be fore armed,” he said.
To get to the promised land, players in the industry need to be upright and the regulators should ensure that offenders are brought to book. If not, the industry may be chasing shadows on the issue of rate cutting as there are elements in the risk management profile that some practitioners use as basis for lower premium thereby questioning the case of rate cutting against them.
For instance, a practitioner once informed that if a policy holder reduces elements of risk associated with its property, it goes that the premium charged on that property will be reduced and he asked, do you call that rate cutting?
The plan of the regulators to trail fraudulent practitioners in the industry is welcome as the Commissioner for Insurance as said that checking the fraudulent practitioners has become necessary as a cursory look at recent occurrences in the sector will reveal that the insurance industry is at a very critical cross road as regard its operations and regulation. Legislations and guidelines are flouted at will by operators and consumers alike, non-adherence to the provisions of the law, delayed claims settlement, rate cutting and other sharp practices in the industry.