We need to do whatever is necessary to make people believe in insurance and its efficacy. We cannot achieve our objectives focusing solely on the concentrated client bases (largely corporate) we all currently pursue.

We have to expand the market to reach our goals. Research and Development activities are weak in insurance. A lot of us pay lip service, for instance to developing the retail market.

Certainly, the lack of a national identity system and a fully functioning credit bureau will make this difficult. But how many practitioners are willing to make the investment to move the notion of retail insurance forward? Not many, considering the results we have achieved thus far.

3. Growing cost of doing business/ poor state of public infrastructure:

It may be trite but commercial banks, which are what we have in abundance in Nigeria, are not really built to develop infrastructure.

It has been said that development in the 21st century must be private sector led i.e. government must let go of the "commanding" heights of the economy for us to make any real progress; and we can see this playing out in Nigeria with the telecoms revolution and the debacle we currently face with power. We would develop faster if the insurance industry were stronger.

First, if insurance companies build up their reserves as they are supposed to do, these can be legally invested in building up the nation’s infrastructure.

Secondly, strong insurance companies have a role to play in underwriting large infrastructure projects to give local and foreign investors the confidence to embark on such ventures.

As we have seen, it is a "catch 22" situation: if infrastructure is not developed, the financial services sector (and the nation at large) suffers and is retarded; infrastructure will remain undeveloped for longer than necessary, if the insurance industry does not rise up to the task. Our destiny lies squarely in our hands.

4. Unethical practices/ Premium receivables/Competition:

These issues are connected and critical. I will not comment here on the issue of unethical practices, which manifest in huge premium receivables, except that they are not restricted to brokers; we all know they exist and what they are.

I expect resolutions at this forum to tackle this malaise. However, it’s disturbing that we’re all still perambulating around the same market - we’re not expanding it. The Agusto report tells us that financial assets in Nigeria double every three years mainly because of inflation.

Hence, the growth we see in our figures (which is still grossly inadequate) is not necessarily a growth in market share. Remember that we share this market with banks i.e. insurance companies and banks are all competing for the same purchasing power decisions within the economy. We cannot overemphasize that we’re losing out. To compete effectively, the present situation calls for an insurance company to innovate or perish.

It can be assumed with a strong degree of confidence, that over the next 5-10 years, the insurance companies that are quick in innovation will absorb the sedentary. According to Mr. Peter Creer in the article referred to above, "the expected reduction in the number of insurance and reinsurance companies in the country would be as a result of inadequate business opportunities to justify the infusion of additional capital into the industry".

He went further to say that this fall would be a prelude to the emergence of the Nigerian insurance market as a strong contestant in the country’s finance sector. These are my sentiments exactly and we shall see a great measure of inorganic growth going forward.

5. Regulatory oversight:

Regulators are generally impervious to change; at best, they change slowly. The Nigerian Insurance Association must therefore assert itself by promoting initiatives required to move the industry forward.

If regulators are not made to see why some measures need to be taken, they will unnecessarily be a clog in the wheel of progress. Part of these initiatives should focus on how to strengthen the institutional framework in which insurance companies operate, particularly relating to claims settlement, and to develop the necessary know-how and human capital.

We should, however, hail NAICOM’s effort on Monday August 25, 2008 when it decided to take the issue of Compulsory Insurance of Public Building under section 64 & 65 of Insurance Act to the next level, threatening to send defaulting owners and even tenants of such structures to jail. This, I must say, is a welcome development for the industry. We pray this government agency would sustain this struggle and extend it into other compulsory areas.

6. Challenges of awareness and need for united efforts:

Despite the financial capacity the industry now commands, it is important to note that if its activities lack awareness, its efforts will still remain within just the elite group that has so far formed the lean patronage class.

Rather than the current individual player’s efforts at creating awareness through the media and other means for itself and products, I am of the view that the struggle calls for pooling our collective resources together for a united frontal awareness creation exercise for our business.

It is when the industry becomes a household brand that has stuck to every mind that we can have the volume of patronages that we quest for.

Before I proceed with recommendations, it is important at this stage to provide a brief profile of four (4) world-class Insurance and Financial Institutions to further reinforce the potentials of and value inherent in the insurance industry in Nigeria.

? AXA is an insurance company headquartered in France, one of the world’s largest with its 189,000 employees and a revenue of $150 billion.

Focus:

• Life Insurance

• Health and General Insurance

• Investment Management

AXA has Five (5) operating business segments:

? Life & Savings

? Property & Casualty

?International Insurance (Including reinsurance)

? Asset Management & other Financial Services

? American Insurance Group, Inc. (AIG) is the world’s leading international insurance and financial services organization with operations in more than 130 countries and jurisdictions.

Global Focus:

? Financial Services

? Retirement Services

? Asset Management

Its financial services business include:

? Aircraft Leasing

? Financial Products

? Trading and Market Making

AIG also has one of the largest U.S retirement services businesses through AUG SunAmerica and AIG VALIC, and is a leader in asset management for the individual and institutional markets, with specialized investment management capabilities in equities, fixed income, alternative investments and real estate.

AIG common stock is listed on the New York Stock Exchange as well stock exchanges in London, Paris, Switzerland and Tokyo.

It is also the principal sponsor of Manchester United F.C.

? ING is a global financial services company providing banking, investments, life insurance and retirement services.

Based on market capitalisation (31 March 2008), ING is one of the 20 largest financial institutions worldwide.

ING covers 75 million private, corporate and institutional clients in 50 countries with a workforce of over 115,000 people.

? ICICI LOMBARD is a General Insurance company in India with over 114 Branches .

? 4 Million Policies

? 11,200 Sales Agents

? 5,500 Full Time Employees

? 2007 Revenue of $860m (N100 billion). This represent about the same figure the entire insurance industry in Nigeria recorded in 2007.

? The need for government to set up a task force or empower the NAICOM with the sole aim of enforcing strict compliance on insurance regulations by the people and government bodies. Our government needs to borrow this leaf from its Canadian counterpart. That the Canadian insurance industry controls the country’s economy is as a result of the actions of such a task force set up and given much power to carry out its duties by the government. It must be a task force that can bite.

? Receipt of premium to be made compulsory before any Insurance Institution issues policy.

? Payments of Premium directly to Insurance companies to be made compulsory while penalties be put in place for failure by any insurance company to remit commission due to Brokers within 5 working days after receiving value.

? Brokers need to focus more on value based consultancy

? Support services such as Loss Adjusters, Engineers and consultants. Assistance services needs to be re-organised and refocused to create a better image for the industry.

? Micro/Retail Insurance: That just like the banking industry now runs micro-finance institutions, the industry should be thinking of micro-insurance to take care of the insurance needs of the lower range of the society which are actually in the majority.

In conclusion, recollect that the issues before us are: what role should financial systems play in promoting industrialization and development? And what role should insurance play within such systems?

As we mull over the challenges thrown up, we must also consider that perhaps the mindset of the average insurance practitioner should change.

Insurance practice in Nigeria, unlike banking, is something of a closed circle; and we can see how dominant banking has become in the nation’s financial services sector relative to insurance. Insurance is beginning to open up; but not fast enough.

I surmise that Nigerian insurance companies should see themselves as financial services firms, rather than just collecting premiums and spending it.

Why don’t we have venture capital products, derivative hedge products, mortgage development products and so on? The principal difference between an insurance company and a bank is that a bank is a depository financial institution, while an insurance company is a non-depository financial institution i.e. a bank by law is permitted to hold public sector deposits in its vault, but insurance companies are technically able to do everything that banks do except keep deposits.

This has strong implications for the way we approach our business; how we treat our paper (certificates), pursue our debtors, and other issues.

I hope that we shall all make a common commitment to raising the level of the insurance industry in Nigeria.