CHUKWUMA ONONIWU
Chukwuma Ononiwu is a doctoral fellow ICRMP-UK, DR.ICRMP-UK, FCILRM-NG, ACILRM-NG, an alumnus of Abia State University and Pan Atlantic University Lagos Business School, a certified professional insurance broker, and a certified risk management professional. He can be reached through riskswisepro@gmail.com and +234-903-596-8732 (WhatsApp only).
Risk assessments are partly outsourced by life assurance underwriting firms with all the attendant financial implications.
The actuarial skills gap in Nigeria has therefore led to high premium rates in the procurement of traditional whole life assurance policies, endowment policies and annuities. The result is that the average individual has preference for investment linked life assurance policies.
This gap has certainly affected regulatory compliance in the insurance industry as a result of the shortage of qualified professional technical staff. It accounts for why the insurance pendulum in Nigeria ticks majorly to the procurement of general insurance. As a corollary it equally accounts for why the penetration of insurance and the overall sector growth is abysmally very, very low, even with the humongous population of Nigeria. Life assurance and pension in other climes, ideally, mop up huge funds for investments in the real sector of the economy, in real estate property developments, in bonds, etcetera, with its economic multiplier benefits, because of its long tenure; unlike general insurance which are annual renewable policies.
However, in a situation where there is a human capital skills gap, most investors and most practitioners will opt for general insurance business operations.
Very few universities offer actuarial science as a distinct professional course of study. This has led to very, very few graduates of actuarial science at the first degree. The tutorial fees and the examination fees to qualify as a chartered actuary are majorly denominated in foreign exchange, which many cannot afford. Most of the insurance firms, because of the germane reasons earlier stated offer general insurance, with the result that most of the university applicants who have the intention of studying actuarial science are advised to study insurance where the job mobility and the career growth is high.
Except for educated parents and guardians, most do not even know the career prospects of being an actuary; unlike being a lawyer, a chartered accountant, a chartered insurer, a medical doctor, an architect, a civil engineer, a computer scientist/ICT engineer, etcetera.
Earnestly, the insurance industry, as we all know, over the decades, has been struggling to cope, due to a plethora of reasons. Presently, the contribution to GDP is below one percent. Thus, the financials of all the insurance firms in Nigeria are not up to the financials of one of the big five banks (FUGAZ) in the country.
The immediate solution is to prudently outsource the risk management functions, the underwriting functions, and the reinsurance functions that need risk managers, actuaries and reinsurance experts. The long term solutions are aggressive public enlightenment campaigns on the need for the procurement of insurance covers, annuities and pension schemes; the teaching of insurance, actuarial science, risk management and pension at the secondary schools, just like financial accounting/economics/business management/statistics are taught in secondary schools. As a corollary, make insurance/actuarial science/risk management, WAEC and GCE subjects; long term sustainable training of university graduates who will impart the needed knowledge; establishment of the needed department of actuarial science and risk management in universities; the endowment of professorial chairs in actuarial science and risk management; and funding by TETFUND in areas of research.
The Federal Ministry of Education, the Tertiary Education Trust Fund, the Nigeria Insurers Association, the Nigeria Actuarial Society, the Risk Managers Society of Nigeria, the National Insurance Commission and the Professional Reinsurance Association of Nigeria should collaboratively salvage the actuarial profession and the practice of actuarial science in Nigeria. We have only two major universities in Nigeria, with its humongous population, offering actuarial science, from first degree to PhD.
They are the University of Lagos and Ahmadu Bello University. Infact, the few actuaries in Nigeria are majorly working in banks and in investment firms. As a corollary, there is a need to upscale the HR capacity content in risk management. Few universities are running risk management as a distinct professional course of study, from first degree to PhD. Bells University Ota, in collaboration with the Chartered Institute of Loan and Risk Management, is running an M.B.A. in Loan and Risk Management.
It is really a big shame that in a country like Nigeria, with its large population, insurance/actuarial science/risk management /reinsurance, contribute below one percent to the GDP. There is, therefore, an urgent need for an intervention by the federal government. Recall that the federal government intervention in 1976, through the enactment and enforcement of the Insurance Decree of 1976, stoutly bolstered the placement of marine insurance underwriting in Nigeria and the placement of reinsurance underwriting generally in Nigeria. Today, Nigeria has skilled HR capacity in marine insurance underwriting and, generally, reinsurance underwriting. If urgent critical templates are not put together and implemented, insurance will be a professional dinosaur in Nigeria or, at the very best, the lines of insurance businesses underwritten will drastically shrink, especially in the areas of life assurance, annuities, and endowments, to the detriment of the Nigerian economy.
An unforgettable lesson from Entebbe Zoo