MAY 17, 2015 : NIKE POPOOLA
Managing Director, Capital Express Assurance Limited, Mrs. Bola Odukale
In this interview with NIKE POPOOLA, the Managing Director, Capital Express Assurance Limited, Mrs. Bola Odukale, speaks on insurance provision for workers
What are the benefits of group life insurance scheme?
The group life insurance scheme is principally to pay death benefits to the next of kins of deceased workers who died in the course of employment. Since 2008, when the scheme actually commenced with the federal workers, a lot of families have benefited from the scheme and a lot of claims have been paid.
With the scheme in place, at least an average civil servant knows that if anything happens in the course of employment, there is something that will be paid to their dependants as immediate succour.
When the federal civil service scheme started, people did not have an understanding of the way it was, but I am sure by the time the benefits are being paid, the average civil servant now knows the benefits. It provides financial compensation to the workers’ dependants in addition to what is in his Retirement Savings Account.
How easy is it for the dependants to access the claims if the worker dies?
Initially this money was paid into the RSA account and there were some challenges for the next of kin to access the funds. But when the Pension Reform Act 2014 came into effect, it made the claims process very easy.
The act now stipulates that the insurance company should pay to the named beneficiary rather than the RSA account because a lot of people complained that they could not access it. This used to make the immediate succour that it should give to the beneficiary undermined. I think a lot more people will now see more benefits because they can access the benefits.
What are the challenges of the group life insurance scheme?
The major challenge we have is about data gathering in the government sector. If we are able to get enough data, they will help us to build up the data base for the civil servants as far as this insurance is concerned. Life assurance thrives on data; it is not like the general business.
Without data, we cannot do proper valuation of rate to be charged and the accurate record on claims history. We should also be able to advise government based on the data concerning each ministry. For example, we should be able to give information on the percentage of death in the area and the cause and be able to advise on how to mitigate it.
More than 60 per cent of the MDAs don’t have data or are not willing to make them available. In group life, we need data such as the name, age, emolument of every individual you cover, but we do not have access to such data in government group life. We have in a few of the MDAs but not all of them.
The second is the issue of the premium payment. In the wake of the no premium no cover, premiums are not paid as and when due. What that means is that cover commences when premium is received.
The policy of no premium no cover is from government. So we need the support of the government to make it work smoothly by ensuring that the premium on the civil servants are paid as and when due. This will also make every member to enjoy the benefits and the insurance industry too can have money to meet up their obligations.
There is already a buy in by the Federal Government because it is backed up by the PRA Act. Between 2004 when the act was enacted and today, a lot of awareness had been created on the essence and the advantages. A lot of people have come to understand what it is.
How is the private sector complying with the group life scheme?
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I am sure the private sector is aware of the act because there has been sufficient sensitisation for an average company within the organised private sector to know that there is something called group life scheme.
One of the problems with the private sector is there is not enough enforcement that will compel them to comply. Also, if the organisation is facing some challenges, you will see insurance coming last on the priority list. In fact, when they start thinking of insurance, the likelihood is that they will think of the insurance of their assets, vehicles, goods, and money before they start thinking of personnel. This is because human resource is something we do not place enough value on. This is what I think. Operators in the private sector need to know it is a law which has to be obeyed. Second, they need to know that when they have group life for the employee, it gives the employee a sense of belonging that the organisation cares and their dependants will not be left in the cold if anything happens. Third, it also helps the organisation to transfer their risks to the insurance company. For some organizations, when they lose their employees; they begin to get jittery and some of the relatives begin to make trouble with them. This can be avoided where there is a group life.
How is the group life a social welfare scheme?
The starting point of seeing insurance as a social welfare scheme is the step the Federal Government has taken. This is a right step in the right direction. It is a bid to improving the welfare of an average worker in the government sector throughout their working life.
It has thus taken the right step by putting the scheme in place and paying the premium. All we need to do is to key into it. The government has set the pace. A lot of states are not doing group life scheme till today. By the time we have the state governments keying into it, and it becomes full blown; I am sure it will make more meaning even to the private sector.
Just like in the advanced countries, as long as you are working either for the government or the private sector, there is an aspect of your welfare that is already taken care of so that in the event while doing this job and death occurs, the people that are dependent on you will not suddenly wake up and everything will be in disarray.
There is already a welfare scheme. The only thing we need to do is to ensure compliance from the state governments and from the private sector. Getting the state governments to embrace the scheme is very key because after the Federal Government, the states are the next largest employers of labour.
As we advance, you will find a situation where even groups on their own will willingly take group life insurance and it is already happening, like trade associations, clubs. We have a lot of trade associations and artisans that have taken up the group life scheme in place. It is a huge scheme and for the welfare of the people.
What is annuity?
It is an area of insurance not as exposed to the industry as other forms of insurance that we know. We still need to create a lot of awareness on the benefits of annuities to retirees. The issue of annuity came into prominence after the PRA 2004 which introduced the Contributory Pension Scheme.
Initially, what we had at the federal and state levels were gratuity and pensions where you would retire and withdraw pensions for life. That in itself is a form of annuity because annuity simply means a stream of payment over a period of time.
When you have bulk money under the CPS before you retire, you can have annuity so that like the pensions of those days, you can on periodic basis take some amounts from the insurance companies to take care of yourself till you die. I think the public needs to know the benefits. It is to safeguard the funds you have contributed under the CPS such that you don’t have it as a bulk and lose it but you can take it in instalment. They need to have its basic understanding. One of the challenges in our industry today is the fact that the annuity is competing with the programmed withdrawal from the PFAs. We need to create more awareness on it because it has come to stay.
How was the performance of Capital Express in the last financial year?
We came out fairly okay but not up to our expectations. This was due to a lot of things that happened in the course of the year. Right from the beginning of the year, we had a run on rate which was a major challenge that we faced in 2014.
We started the year with some of our businesses exchanging hands because of the cut throat competition in the market. Business rates went so low that it made no sense any longer and we had no choice but to leave some of the business because for us, they were things we had done for the past three to four years, and we knew what the claims history was. For other competitors to come and offer premiums that were much lower, we knew it was not going to make any sense so we had no choice but to opt out of some of the businesses. However, as we speak today, some of those businesses are already coming back to us for renewal because some of the clients actually realised what they did.
They had the problem of not being able to have access to their claims in good time. They had the problem of relationship as far as services were concerned. To us, the fact is not just getting the business and the premium, but the services that we offer in terms of claims payment. We are already recovering some of the business we lost to our competitors.
What are your plans to develop retail business?
What we tried to do was to put a lot of efforts into our retail business because those cut throat competitions took place in the corporate businesses. We saw the need to put a lot of attention to our businesses and some other conventional businesses we had done in the past that were not really given enough attention to. They were products that we designed on our own. We were able to improve on our retail revenue.
source:PUNCH.
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