| |
 |
about
us |
|
SPEECH
2003 IILA
ANNUAL CONVENTION
INSURANCE & LOSS ADJUSTING IN
AFRICA
BY
SAMMY A. I. SOTOMI
ACII FCIIN AILA
(President – Institute of Loss Adjusters
of Nigeria)
(Chairman – Equity Trust Loss Adjusters)
Being an Address Delivered at the Breakfast
Meeting of the
AUSTRALIAN INSURANCE LAW ASSOCIATION/
AUSTRALIAN INSTITUTE OF CHARTERED LOSS
ADJUSTERS
&
INTERNATIONAL INSTITUTE OF LOSS
ADJUSTERS
On Tuesday 23 September, 2003 @
Adelaide, Australia.
Mr. Chairman of session, President
of IILA, ladies and gentlemen, good morning. It’s a great pleasure
and
privilege for
me to address this great gathering of Professionals on the topic of
INSURANCE & LOSS
ADJUSTING IN AFRICA.
My address is going to be very brief
only on the practice and not on what is
Insurance/Loss Adjusting, a twin
subject that I do believe that most of
you are probably more vast and
experienced than my humble self.
HISTORICAL BACKGROUND
The Insurance Companies in Africa
evolved mainly from the Agencies of the
major insurance companies in
Europe that were in existence in Africa
Countries
during the colonial era, which later metamorphosed into
full insurance
companies
such as Royal Exchange Assurance in Nigeria along with the National
Insurance
Companies established by each African Country after independence.
The National Insurance Companies in
Africa are usually government agencies handlingmost of the government
accounts with the dual purposes of preventing
capital flights
in term of insurance premium and as a tool of
economic development.
Later, as the economy of the African
countries continue to develop, indigenous insurance
companies were established as private companies limited by shares and
those floated on
the stock exchanges as public liability companies.
On the other hand, the growth and
development of Loss Adjusting in Africa follows closely
that of the
Insurance Companies as Service Providers for Insurers in the
business of Claims
handling, although the
practice of loss adjusting as presently known
world over became
prominently practiced and widely
accepted within the last two and half
decades in Africa.
Loss Adjusting practice in Africa is
still predominantly dominated by foreign Loss Adjusters
from Europe
and North America who have established branches in some
African Countries
such as Cunningham Lindsey,
Mclarens Toplis, Crawford, & Gab Robins (
all having presence
in S/Africa); and CCS Global with presence
in North Africa, Kenya,
Uganda, Tanzania & S/Africa.
Some of the foreign Adjusters
establish Correspondence and Associates in some African
countries where they do not have an establishment of a branch of their
operations.
However, Nigeria and South Africa
have in existence the largest number of trained and
professionally
qualified indigenous Loss Adjusters in Africa with
Nigeria having a total of
thirty-three (33) registered
Loss Adjusting Firms.
Also, the practice of loss adjusting
is more developed and well established in these two
countries with
each having their Institute of Loss Adjusters (ILAN for
Nigeria & ILASA for
S/Africa) which are involved in
self regulations, formulation of code of
practice & conduct
and the protection and preservation of member
firms’ interests.
Requirement for establishment of
Insurance Companies and Loss Adjusting Firms in Africa
varies, but most
governments exercise some sort of control and
regulations in the control
of the business and most have in
existence legislations guiding the
practice of the business
with some governmental agencies acting as
Regulatory Authority such as
National Insurance
Commission (NAICOM) in Nigeria.
THE PRESENT
The present developmental stage of Insurance and Loss
Adjusting in Africa in comparison to the rest of the
world
could best be described by the following statistical table:
TABLE 1
|
VARIABLES (2001) |
OTHER PARTS OF THE WORLD
|
AFRICA |
1.
|
PREMIUM INCOME
US $ 2,444BILLION |
USA/JAPAN/EUR – 66%
EAST EUR/ASIA -- 28%
ORS EXCL AFRICA-5% |
1%
|
2. |
PERCENT OF INSURANCE
CONTRIBUTION TO GDP
|
BETX
8.8% - 11.17% |
4.6% |
3.
|
PREMIUM PER HEAD OF POPULATION |
USA - US $2765.50
JAPAN – US $ 3,908.90 |
LESS THAN
US$500.00 |
4.
|
INTERNET ON-LINEPOPULATION
|
ABOUT
505.60 MILLION
|
ABOUT
4.82 MILLION
|
The above data show clearly that
Insurance/Loss Adjusting in Africa is still very much at its early
stage
of development/growth but with a
great potential.
At present, there are over three
hundred (300) registered insurance companies in Africa
with a
corresponding sixty (60) Loss Adjusting Firms (estimate), but the
pattern of premium
generation and
size of these companies is that the National Insurance
companies of each of
the Africa companies
produce averagely 25% of the total premium as they
have a near
monopoly of their governments’ accounts.
For example, although there are over
one hundred and ten (110) registered Insurance
companies in
Nigeria but 85% of the total premium income in the Nigerian
insurance marketis generated by the
biggest ten of those companies. The same pattern goes for the Loss
Adjusting Firms.
Furthermore, South African insurance
market generate over 50% of the total premium
income for the
Continent and having the largest and the most developed
life assurance
portfolio.
However, the major reasons
identified for the low insurance premium income in Africa is
due to the twin
problem of low capacity retention and inadequate
technical know-how in
the evaluation, assessment and
underwriting of the Oil, Gas, Energy and
Aviation Risks.
For example, the main stay of the
Nigerian economy is Petroleum Oil with it accounting for
95% of the
Foreign Exchange Earnings and 65% of the Budgetary Revenues
of the Government,
yet the insurance
of almost all risks associated with Oil is placed
directly overseas through
the National Insurance
Corporation of Nigeria (NICON) with minimal
retention in the country.
Presently, the major Re-Insurers for
the African market are Munich-Re and Swiss-Re, with
both sharing
between them 90% of the business and having offices in
South Africa and with
Swiss-Re having an
additional office in Abidjan, Cote D’Ivoire to serve
the West African market.
The following table is an
example of premium income distribution of insurance companies in
Nigeria.
TABLE 2.
GROSS PREMIUM INCOME OF
INSURANCE COMPANIES IN (=N=000) NIGERIA BY CLASS OF BUSINESS
(1991 – 2000) AS PER THE NIA.
|
Class |
1991 |
1992 |
1993 |
1994 |
1995 |
1996 |
1997 |
1998 |
1999 |
2000 |
|
Fire |
343,094,(16.2) |
462,943,
(11.1) |
760,433,
(10.9) |
1,011,526,
(11.6) |
1,640,349,
(9.3) |
2,246,153,
(10.5) |
2,291,445,
(12.0) |
2,784,213,
(14.6) |
2,760,68,22
(12.9) |
3,445,549,871
(12.3) |
|
Motor |
4 06,573,644
(
(19.21) |
1,002,953,
(24.1) |
1,747,994,
(25.1) |
2,417,427,
(27.9) |
3,205,070,
(18.1) |
4,221,283,
(19.8) |
5,269,160,
(28.0) |
5,572,915,
(29.2) |
5,268,5696
(24.6) |
7,046,210,483
(25.6) |
|
General Acc. |
909,348,196
(43.1) |
1,190,143,
(28.5) |
2,471,030,
(35.6) |
2,918,029,
(33.7) |
8,550,496,
(48.3) |
9,379,267,
(44.0) |
6,137,423,
(33.0) |
4,377,652,
(23.0) |
3,776,0485
(17.7) |
7,953,682,914
(28.7) |
|
Marin& Av |
453,353,004
(21.5) |
842,892,255
(20.2) |
1,112,120,
(16.0) |
1,231,147,
(14.0) |
3,057,497,
(17.3) |
3,357,388,
(15.7) |
2,445,379,
(13.0) |
3,541,757,
(18.6) |
4,636,622,
(21.7) |
4,071,701,211
(14.8) |
|
Life |
368,901,168
(17.5) |
671,401,061
(16.6) |
863,780,233
(12.4) |
1,052,512,
(12.8) |
1,234,918,
(7.0) |
2,128,115,
(10.0) |
2,531,752,
(14.0) |
2,782,852,
(14.6) |
4,952,4527
(23.2) |
5,149,185,114
(18.6) |
|
Total |
2,112,369,
(100.0) |
4,170,334,
(100.0) |
6,955,357,
(100.0) |
8,630,644,
(100.0) |
17,688,305,
(100.0) |
21,332,209,
(100.0) |
18,675,160,
(100.0) |
19,059,390,
(100.0) |
21,394,370,
(100.0) |
27,666,329,593
(100.0) |
SOURCE: RETURNS MADE BY MEMBER
COMPANIES TO THE NIGERIAN INSURANCE ASSOCIATION.
NOTES:
1.
All
financial figures are in Naira and the exchange rate to US $1 is =N=120.
2.
The figures
in parenthesis are in percentages and each represents the proportionate
share of that class in the total GPI for
the particular year.
3.
General
Accident includes – Accident, Burglary, Workmen’s Compensation and
Miscellaneous Insurance business not else
where classified.
TABLE 3.
PARTICULARS OF LARGE CLAIMS OF
=N=1MILLION & ABOVE (2001).
The
table below shows large claims of =N=500,000 each and above paid under
various classes
of business
Between (1997 – 1998) and =N=1,000,000 and above paid in 1991 and 2001
as reported by some member
Companies.
Large claims of =N=1,000,000 each and above paid by some member
companies in 2001 amounted to
=N=6,605,183,592 as against =N=2,743,424, 119 paid in 2000.
An
analysis of large claims paid in 2001 showed that the first three
highest single claims were paid by
NICON Insurance Corporation and included the following: =N=944,000,000
paid to N.N.P.C.
On
Fire, =N=696,301,008 paid to N.N.P.C on Damage to Crude Blow-Out at
Orgho N0. 2 Well.
An
examination of the table below showed that most of the losses paid in
2001 were on fire policy.
|
S/N |
NATURE OF LOSS
|
1997 |
% |
1998 |
% |
1999 |
% |
2000 |
% |
2001 |
% |
|
1. |
FIRE |
337,497,722 |
33.0 |
388,781,260 |
18.0 |
848,194,120 |
34.5 |
990,965,425 |
36.12 |
2,731,566,885 |
41.35 |
|
2. |
BURGLARY/THEFT |
117,955,933 |
11.5 |
253,607,980 |
12.0 |
269,872,825 |
11.0 |
379,062,833 |
13.82 |
427,526,229 |
6.47 |
|
3. |
CONTRACTORS ALL RISK |
554,847 |
0.1 |
19,742,112 |
0.9 |
143,660,917 |
5.8 |
138,952,107 |
5.06 |
346,302,785 |
5.24 |
|
4. |
FIDELITY GUARANTEE |
49,282,132 |
4.8 |
58,331,239 |
2.7 |
24,220,168 |
1.0 |
149,894,461 |
5.46 |
20,987,829 |
0.32 |
|
5. |
ENGINEERING |
50,424,891 |
4.9 |
37,301,919 |
1.7 |
185,911,246 |
7.6 |
61,399,170 |
2.24 |
175,484,337 |
2.66 |
|
6. |
MOTOR |
204,181,438 |
19.9 |
230,568,675 |
10.7 |
96,640,837 |
3.9 |
84,009,222 |
3.06 |
661,010,347 |
10.01 |
|
7. |
PERSONAL ACCIDENT |
26,054,905 |
2.5 |
150,955,094 |
7.0 |
10,722,168 |
0.4 |
34,819,750 |
1.27 |
139,099,992 |
2.11 |
|
8. |
MARINE |
61,813,062 |
6.0 |
210,449,330 |
9.8 |
558,095,280 |
22.7 |
162,575,900 |
5.93 |
1,433,798,809 |
21.71 |
|
9. |
PUBLIC LIABILITY |
4,128,205 |
0.4 |
10,213,483 |
0.5 |
31,745,327 |
1.3 |
1,028,048 |
0.04 |
20,996,632 |
0.32 |
|
10. |
AVIATION |
1,500,000 |
0.2 |
524,560,243 |
24.4 |
107,966,200 |
4.4 |
- |
0.00 |
281,699,691 |
4.26 |
|
11. |
OIL |
- |
00 |
15,481,931 |
| | |