New supervision model to engender specialisation

New supervision model to engender specialisation
A fresh recapitalisation in the nation’s insurance industry owing to its low capital base and penetration has spurred mergers and acquisitions to reposition the sector for a new era of efficient operations.

The move, according to stakeholders, is part of efforts by the National Insurance Commission (NAICOM) to make the sector once again attractive to Nigerians.

Following the apathy for the industry, mainly caused by acts of omission and commission manifest in the forms of non-payment of dues to policy holders and the shirking of other obligations over the years, the citizens now avoid insurance products. To reverse the trend, it has, therefore, become incumbent on the regulator to win back the confidence of Nigerians by strengthening the financial base of the sector. If the sector comes fully alive again on the basis of the new policy, the incidental benefits are many. Jobs will be created and the contracting national GDP may experience a breather and an opportunity to expand.

Linking the sector’s stagnation to weak capital base owing to the irregularities which have resulted in the citizens’ incurring losses running into billions, the stakeholders are unanimous in repositioning the sector for greater growth in line with current economic realities.

Among the measures to achieve this are mergers and acquisitions. Companies with enough capacity are buying up smaller ones while the weaker ones put up themselves for acquisition.

Notable among the deals is Great Nigeria Insurance (GNI) Plc’s completion of the sale of 75 per cent stake to Insurance Resourcery Consultancy Services Limited (IRCSL) to emerge a major shareholder in the firm.

Similarly, an Ivoirien insurer, Sunu Assurances Vie Cote d’Ivoire, earlier in the year, acquired a 60 per cent stake in Equity Assurance. Equally, Cornerstone Insurance bought FIN Insurance, making it a subsidiary. The development comes nine years after the last recapitalisation .

Also being planned is a new risk-based supervision (RSB) model that would revolutionise the entire operations in the industry. According to the regulator, the innovation will engender business specialisation. It particularly wants to outlaw the prevailing situation where every insurance firm underwrites all manner of risks even when financially unfit for them.

Explaining the sectoral reforms, the Commissioner for Insurance, Alhaji Mohammed Kari, noted: “Consolidation is inevitable. We have many players in the industry that do not add value to the services they provide, both in the intermediary and insurance sectors.”

He clarified that the consolidation would not mean just additional funds, but also redefining and identifying the type of insurance business to underwrite.

Kari went on: “This is because, to be able to hold a risk, you must have enough asset base to cover the risk. So, risk-based is being able to identify what is your financial capability. If your financial capability does not guarantee you to insure a refinery or airline, you will not be allowed to do so. Your financial ability may be to insure a Keke NAPEP. That is what risk-based is going to be.”

The Minister of Finance, Kemi Adeosun, has also stressed the need for the recapitalisation and repositioning of the industry, noting: “The first top three banks in the country have over N30 billion capital base each, while the top three insurance companies’ capital base is lesser.”

According to her, the objective of the reform is to ensure the emergence of bigger and stronger insurers.

The recent edition of Insurance Digest, a publication of the Nigerian Insurers Association (NIA), confirms the liquidity crisis in the sector. It discloses that the shareholders’ funds of seven firms are below statutory requirements while 10 others are slightly above the threshold.

According to the publication, the capitalisation of Standard Alliance Life Company Limited is N720.92 million as against the statutory N2 billion; International Energy Insurance Plc, N1.5 billion as against industry requirement of N3 billion and Goldlink Insurance Plc, N3.90 billion.

Others with negative shareholders’ funds include Investment & Allied Insurance Plc, N955.26 million and Spring Life Assurance Plc, N351.12 million.

Firms with liquidity slightly above requirements are Sterling Assurance Nigeria Limited, N3.1 billion; Staco Insurance Plc, N3.17 billion; Equity Assurance Plc, N3.43 billion and Capital Express Assurance Limited, N2.06 billion.

The umbrella organisation for all insurance companies in the country further corroborated NAICOM on the new supervision template. It says that the recapitalisation is to ensure specialisation in which underwriters would be restricted to a particular line of business based on financial capacity.

The new recapitalisation is to be executed on this platform, as the guidelines are due for the public this first quarter.

Several operators, who spoke with The Guardian, lauded the moves.

Courtesy Nigeria Guardian Newspaper of today 23rd March 2017 

3 KEY THINGS EVERY SALES MEMBER MUST KNOW

Within five years of graduation, over 50 percent of U.S. college graduates end up in a role that requires sales skills. The formal titles may not have “sales” in them, but the job descriptions do. A few examples include business development, financial advisor, business analyst, consultant and even customer service.

According to Forbes, in 2016, the top career for college graduates was account management. Guess what? Successful account management requires a level of sales skill and activity.

To be successful in sales, you must know how to add value to the customers you are working with. Sales has evolved from pushing products to selling value. To sell value, it is critical to know what is valuable and how that value will be measured.

Today, business and financial acumen are no longer ancillary skills. They are an imperative set of competencies that high-performing sales professionals must have.

Business acumen is defined as a keenness and quickness in understanding and responding to a business situation. It is the ability to understand how a business—any business—operates and measures their results. Because accounting is the language of business, a basic knowledge of accounting terms constitutes financial acumen.

The good news is that you doesn’t have to be a financial analyst or study finance to gain mastery. Instead, focus on the top three areas of business and financial acumen by helping sales professionals develop the following competencies regarding your customers.

Industry Knowledge

Most industries have their own language. For example, key terms in a health care organization will be very different than those in a manufacturing company. While they may both reference the words “quality and safety,” those terms could have very different meanings. It is imperative that front line employees who interact with your customers adopt and use the same vocabulary.

Financial Performance

A general principle for any business is that they have a profit motive. In other words, they exist to generate profits for their owners and/or shareholders. It is important to understand how a business makes money and how it measures its financial performance.

There are key three statements that all publicly traded companies are required to generate and publish:

• The income statement, which measures what a company earns and spends in a given period of time
• The balance sheet, which measures what a company owns and owes at a specific point in time
• The statement of cash flows, which measures the incoming and outgoing cash flowing through an organization during a period of time

Sales reps should be versed in the terminology found on these statements as well as how to interpret them for a basic understanding of how companies make money.

Organizational Structure

Every company has executives, managers and employees. Each person has a defined role and span of responsibility. Some companies have a very hierarchical organization with many layers of management, while others are “flat” and may have only a few layers of management. Understanding how companies are organized gives salespeople insight into how decisions will be made and who is likely to be involved in any changes brought about by a purchase.

As you provide training to individuals in various customer-facing roles, facilitate their ability to add value throughout each customer touchpoint and interaction. Give them the foundational knowledge to add value to the people to whom they are selling.

Understanding a customer’s needs is a critical skill. But at the end of the day, business decisions are based on financial acumen. That skill can only be demonstrated if you speak the same language as the executives you call and if you view the world from their perspective.