Insurers express fear of COVID-19’s effect on industry

As COVID-19 pandemic continues to wreck havoc on the economy of various countries across the world including Nigeria, insurance underwriters in the country are not comfortable with the situation, saying the effects of the pandemic may not augur well with the industry.

Speaking specifically on the impact of world health challenge occasioned by the outbreak of Coronavirus on the ongoing recapitalization exercise in Nigeria in an interview in Lagos recently, the Managing Director, Universal Insurance Plc, Mr. Benedict Ujuatuonu, expressed worries on the likely negative effect of the pandemic on the industry’s activities.

He said that its no longer a secret that the global economy as well as the local economy have been affected by this epidemic, because the world is now a global village.

With companies closing down globally and having financial challenges, he noted that it will be difficult to get Foreign Direct Investment (FDI) into the Nigerian insurance industry, adding that Companies that wanted to invest in Nigeria before now, are, by themselves, needing financial bailout.

He said if the situation is not urgently brought under control, the recapitalisation exercise is going to be tough. Pointing out that if the investors are to come, the closure of the two international airports will prevent their entry, at least for now.

The other option, he said,  is to look into the local market for funding, but that the reality is; most of these local investors might not have that financial muscle to invest now, if the virus continues to spread in the next one month.

To him, “The capital market has been down for the past two to three weeks. So, where else will the funding comes from? Its going to be a challenging year for insurance operators, no doubt, however, I don’t see the regulator shifting the deadline again.”

On the other hand, Actuarial Scientist, Mr. Pius Apere said, there is no direct impact of the epidemic on the insurance industry recapitalisation exercise, as most of the foreign direct investment deals into the Nigerian insurance industry must have been concluded by relevant parties before the virus outbreak.  

He said the outbreak would be more felt by life insurance companies who have sold life and travel insurance covers to policyholders, adding that,  they are expected to witness huge claims emanating from death as well as flight cancellations.

The Managing Director/CEO, African Alliance Insurance, Mrs Funmi Omo, said: “Naturally, the slump in global crude oil, world recession (technically), economic meltdown and interest rate crash will result in low drive for investments because the economic indices will not stimulate investments and economic growth.

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