By Cynthia Alo
In spite of its ravaging effects on the global economy, experts have said there are opportunities for growth of insurance in coronavirus pandemic.
Speaking to Vanguard, they noted that while the insurance industry will no doubt suffer the severe consequence of the pandemic, it nevertheless will compel industry operators to be more creative, adding that the pandemic will also increase recognition of the need for insurance.
Managing Director, African Alliance Insurance Plc, Mrs. Funmi Omo, noted that as much as the pandemic has become a threat to the economy, it should also serve as an opportunity for the industry players to brace up and become more creative.
On opportunities for insurance in coronavirus, Mrs Omo said: “Obviously the pandemic is a threat to all businesses, not just insurance. As the risk bearers, however, insurance might be the last line of succour for the people.
“Therefore, as much as there are threats, there are also opportunities; opportunities for the industry to become more agile and creative to find the gold in the mud.”
It’s threat to global growth—Old Mutual
Also speaking to Vanguard, Managing Director, Old Mutual General Insurance, Mr. Olalekan Oyinlade, said the COVID-19 pandemic represents a severe threat to global growth.
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According to him, a difficult macro-economic picture will put pressure on corporate spending and individual disposable income which will have an impact on top line.
Oyinlade noted that the outbreak would hit Nigeria largely due to its dependence on the oil and commodities markets, stating that China accounts for about a third of oil consumption demand, so the slowdown in China has caused oil prices to fall.
His words: “The Nigerian economy has some level of correlation with crude oil prices. So there is a potential for an overall economic slowdown and, by extension, a negative impact on the insurance industry, as well as a slowdown in construction such as railways and projects.
“However, it gives an opportunity for internal growth of the local manufacturing industry, SMEs and to enhance key sectors in the economy. However, this will require time and focus.
‘’The situation may dampen the appetite of investors in the insurance industry; however, this situation has also exposed the need for insurance. We do expect strong headwinds, but as a group, we are better positioned to withstand them.”
Still on insurance in coronavirus, Mr. Ekerete Gam-Ikon, an insurance consultant, said the pandemic might attract investors to the insurance industry in their bid for higher returns.
Noting that the pandemic would not only throw the global economy into recession this year but even into next year, Gam-Ikon said: “Nigeria and other African countries must ensure that the spread is contained in order to provide the cushioning effect that investors from Europe and the US will need to earn reasonable returns.
“It is in this context that we can hope that investors will still look at Nigeria and the insurance industry as destinations for their funds.
“Otherwise, we should expect and prepare for the worst-case scenario, which is that some companies will miss the opportunity for attracting capital on account of COVID-19. That will become their history.
“With the emergence of the virus into the country, industry operators should be on top of the game in engaging relevant stakeholders.
“The leadership of the insurance industry in Nigeria needs, firstly, to get into the discussions on COVID-19 as a key stakeholder coming from the angle of health and travel insurance.
“Secondly, people especially policyholders, should be assured that their policies cover this situation. If not, they should also be told.”
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