Rate Cutting Rampant – Irukwu

Professor Joe Irukwu, former Managing Director, African Development Insurance Company Limited, says the level of unethical practice of rate cutting is higher in the Nigerian insurance industry than any other country in the world.

Irukwu spoke at a "Seminar on Corporate Governance" organised by the National Insurance Commission (NAICOM) in Lagos recently.

While comparing insurance practice in the country in the 70's when he was actively involved in the business and the practice today, he lamented that the basic fundamental that steered the growth of the industry in the past have been eroded.

He confirmed that the country has the higher incidence of rate malpractice in the global insurance market, adding that the insurance regulator is doing its best to force the operators back on track of ethical practice and adequate rating.

"In the early days of insurance, it was a small industry, but highly disciplined, and people were very professional and united. Now we have bigger insurance industry in terms of premium volume, but we have some people who are not really disciplined and practicing insurance properly.

"We have the highest level of premium cutting in Nigeria more than any other country. So, a number of factors have been responsible for the inadequacies of the insurance industry, part of them are due to the culture of the people, because Nigerians do not like insurance business. The other part is due to industry inflicted injuries.

"The practitioners are not doing their best to maintain insurance culture the way it should be. What I am saying, is that we still have a long way to go. But luckily for us, we have an active regulatory authority in the person of NAICOM and its present leadership," Irukwu said.

"What NAICOM is doing on corporate governance is very good and if we follow those principles of corporate governance we will do better. I believe we have started very well, if the level of awareness improves and people begin to obey the laws of insurance we will have a better future, for less than 10 per cent of those who should be insured are insured. So, we still have about 90 per cent development ahead of us," Irukwu said.

He also noted that in the early days of insurance in the country when he was very active in the business, there were few or no fake operators, adding that the nation's value system has not developed properly due to the civil war.

"What is happening in insurance is happening everywhere in all aspect of our national life. So, we now have fake companies than what we had in the past," he regretted.