By Bethel Obioma
Insurance Correspondent, Lagos

Chairman of the Nigerian Insurers Association (NIA), Oye Hassan-Odukale said the insurance industry only witnessed marginal growth occasioned by the lull in the economy and increase in operational costs.

Hassan-Odukale who spoke at the 34th Annual General Meeting of NIA on Wednesday, said the industry could only muster a 19.0 per cent increase in its projected gross premium income from N55.9 billion in 2003 to N68.4 billion in 2004.

“The compliance by insurance companies with the recapitalisation requirements of the Insurance Act 2003 exerted a lot of pressure on executives of insurance companies to justify the injection of funds into their various companies and brought about changes in the ownership of some companies,” he said.

The industry has continued to grow its claims reserve in compliance with the statutory maintenance of outstanding claims reserve for all operators.

The reserve which stands at about N5 billion is a regulatory machinery aimed at ensuring that insurers are always able to settle outstanding claims when they fall due.

Experts say the statistical trend from 1998-2001 shows a steady increase in the reserve, a situation they explained is indicative of an improvement in insurers’ premium income.

In 1998, outstanding claims reserve which stood at N952.7 million grew to N1.76 billion in 1999, N2.26 billion in 2002 and N3.58 billion in 2001.

Section 20 of the Insurance Act 2003 requires mandatory provision for outstanding claims that shall be credited with an amount equal to the estimated amount of all outstanding claims.

The Act also requires, “a further amount representing 10 per cent of the estimated figure for outstanding claims in respect of claims incurred but not reported at the end of the year under review.”

Also, Ogala Osoloka, a veteran insurer said underwriters have done a lot to rid the insurance industry of the negative image in connection with alleged non-payment of claims.