Yemisi Izuora
The declining oil price which prompted government to take measures to stabilise the economy is affecting the insurance industry negatively.
Some of the monetary policies embarked by the Central Bank of Nigeria (CBN) probably led to the depreciation of the naira from N155 to N198 to the dollar.
Reacting to the scenario the Nigerian Council of Registered Insurance Brokers (NCRIB) has said the insurance industry is being negatively affected.
The NCRIB said the negative effect is being felt in declining insurance policies taken by Nigerians following declining economic fortunes and declining purchasing power of Nigerians.
“The devaluation will also adversely affect the insurance industry, given the fact that insurance thrives when the economy is robust. At the corporate level, there is the likelihood of a bulls run on the already fragile equities of quoted insurance companies, affecting their solvency.
According to the president of the NCRIC Ayodapo Shoderu, at the level of the common man, the devalued naira will reduce the disposable income of Nigerians, further precluding them to care less about undertaking insurance.
He said: “Whilst the present challenge should make national policy makers to be more ingenious in managing the precarious economic state, the onus is also on us as practitioners to be more prudent and more resourceful in running our businesses. On the part of the political class, my take is that the time has come for Nigeria to break fast the façade of mono economy and develop other latent mineral resources that the nation presently has in abundance.
“We must also continually put in place strategies to promote the nation’s industrial sector so as to transform our nation from a consumption-based to production-based nation,” he noted.