An insurance premium is the amount of money that an individual or business must pay for an insurance policy. This innsurance premium that cover the liabilities associated with the policies that they underwrite, use to invest the premium in order to generate higher returns.
Jide Orimolade, the Managing Director/ Chief Executive Officer of Law Union & Rock Plc, has said the insurance sector can generate N1 trillion premium income by 2020 if there is genuine collaboration among operators towards curbing rate cutting.
Orimolade, who disclosed this at a media forum in Lagos, stated that continuous abuses in rate cutting will not augur well for the industry.
He stated: “There have been abuses in terms of rate cutting in the market and I don’t think that it will help the insurance industry. If we all collaborate and agree as colleagues that certain rates should be applicable to a particular product, I don’t see any reason why the one trillion premium income target in the industry can’t be attained. For Law Union & Rock, we don’t embrace rate cutting.”
Orimolade added that people don’t buy insurance because they fear that premium is on the high side even when most premiums are relatively small to the amount of claims that can be paid in the event of loss.
He also stated: “Assuming you have a building of N100 million, the amount of premium you are going to pay won’t be more than N200,000. If there is fire damage or peril damage, you can rest assured that the insurance company will come to your aid.”
“Regulators want to make sure that policyholders will be able to have their claims paid for, and thus require insurers to retain adequate reserves.”