Insurers brace up for potential N2bn claims on cash swap protests

By Olivia Nnorom

The currency redesign and cash swap policy implemented by the Central Bank of Nigeria (CBN) and the resultant scarcity of naira notes has sparked violent protests in some major cities across the country. This has led to speculations from industry experts that insurance companies in the country are likely to receive claims of about N2 billion or even more from commercial banks whose assets were vandalised by Nigerians frustrated by the scarcity of the new N200, N500, N1,000 notes and the controversial  rejection of the old naira bills.

There were reported cases of bank branches destroyed by irate protesters including First Bank branch at Akpakpava,Benin, Edo State; Wema Bank branch in Ibadan, Oyo State; First Bank branch at Sapon, Abeokuta,Ogun State. There were also other unreported cases of ATMs and other bank properties vandalised across some bank branches nationwide, particularly in Edo,Oyo and Delta states.

While banks are currently taking stock of what is happening with the aim to lodge claims through either their insurance brokers or directly to the underwriters, insurers on their part, said they are assessing the ongoing situation, as claims also include the banks and companies who had business interruption insurance coverage and have their businesses affected by the protests.

Tope Adaramola, executive secretary/CEO, Nigerian Council of Registered Insurance Brokers(NCRIB), assured that the destroyed assets that were duly insured will definitely be compensated for, by insurers. He added that, under the current dispensation and management of the National Insurance Commission (NAICOM), NIA and NCRIB, the industry will continue to honour its claims obligations no matter how magnitude it can be.

Adaramola described the spate of events as an eye opener for business owners and individuals to subscribe to insurance, as any valuable is worth insuring.

“Currently, because of the economic situation in the country, there is little recovery capability for corporates and individuals to replace damaged assets, hence, insurance is what you can rely on for succour,” he added.

In the same vein, Yetunde Ilori, the director general, Nigerian Insurers Association (NIA), maintained that insurance companies will honour claims and obligations arising from the recent crisis as long as the banks and other victims have the right insurance coverage.

Ilori, however, pointed out that the claims will be honoured by insurers, provided the banks have an extension on their insurance to cover riot and civil commotion.

She further assured the affected banks that there is no cause for alarm, provided they placed their insurances through credible brokers and insurance companies.

The NIA DG opined that the claims from the recent losses does not amount to the magnitude of the EndSARS claims where the industry paid about N20 billion in compensation.

“Though, we don‘t pray that this situation continues, I don‘t believe the magnitude of destruction would be up to that of EndSARS and if operators could pay that of EndSARS, they will definitely pay this as well,“she pointed out,” she said.

Also commenting on the situation, Moruf Apampa, the managing director/CEO, NSIA Insurance Limited, said the protests and vandalism over the naira scarcity is rather unfortunate. He added that it  emphasises the need for insurance of assets and lives.

“The current situation only emphasises the need for insurance because if those banks have genuine insurance coverage and there is extension to cover the risks arising from the protest, they will definitely be paid their claims. But for those who fail to insure, they will be regretting their decisions.

“Insurance is what you buy when it seems you don’t need it because you cannot buy it when you need it, that is, when risk has already occurred. However, the industry is buoyant and strong enough to pay for insured risks that may arise from the protest,” he pointed out.

According to Apampa, insurance premium is very insignificant when compared to the claims amount. He, therefore, urged Nigerians to see the recent naira scarcity crisis as a wake-up call to insure their assets, lives and everything that is worthwhile.