#EndSARS: Projected Rise in Insurance Claims to Hit Operators
Analysts have projected a strong rise in insurance claims due to level of damages perpetrated across the country recently.
Aftermath of the #EndSARS protest hijacked by hoodlums has sent fear into the insurance segment of the economy, the sector which is currently in the process of recapitalisation.
As December deadline for phase 1 recapitalisation of the industry is fast approaching, pressure is already mounting due to expectation of massive claims by policyholders affected by protest turned red.
Analysts said insurance penetration in Nigeria is quiet hollow, but most of the government properties are expected to be covered comprehensively.
This raised fear as Lagos state government indicates that sum of N1 trillion may be required to re-build properties and replace assets destroyed.
Shedding more light on the development, CSL Stockbrokers in a note said the Nigerian insurance sector remains largely underdeveloped.
“Insurance penetration still at about 2% and with the sector contributing less than 0.5% to the nation’s gross domestic products”, CSL Stockbrokers added.
In 2020, the sector which contracted by 29.5% in the second quarter (Q2) GDP report released by the Nigerian Bureau of Statistics.
CSL stated that though it is yet to recover from the effect of the Covid-19 pandemic which has resulted in an increase in in health, travel and business disruption claims.
It said players will now have to face the impact of the recent destruction of properties across the country on claims amidst trying to meet the new capital requirements set by regulators.
Recalled that the peaceful protests staged by youths across the country, mobilized through various social media platforms to protest against the activities of the Special Anti-Robbery Squad (SARS), took a sad turn last week following alleged shooting of unarmed protesters at the Lekki toll gate.
In what could be referred to as a reaction to the shootings, hoodlums hijacked the protests and began the destruction of both private and public properties.
For example, CSL noted that in locations like Surulere, almost every shop, bank, shopping mall and ATM gallery along Bode Thomas and Adeniran Ogunsanya streets were damaged and goods carted away freely and there were reports of similar incidences in other parts of Lagos and in other states.
Also, there were also reports of BRT buses burnt at terminals and buildings razed down by fire.
The Lagos State governor Babajide Sanwo-Olu was reported to have said the state alone would need about N1 trillion for reconstruction after the destruction caused by the hoodlums.
The massive destruction of both public and private property has sparked worries on the ability of the insurance sector to cope with the expected number of claims.
According to news reports, many operators expect claims to run into billions of naira which may be overwhelming for the insurance players if the government fails to offer some sort of aid especially as the sector is right in the middle of a recapitalisation exercise.
In what may be a reaction to these fears, the Nigerian Stock Exchange (NSE) Insurance Index, a benchmark to measure the performance of the insurance sector closed lower by 0.59% for the week (ended 23-Oct-2020).
It is however not too clear how much of the #EndSARS loss incident is covered under the different types of available policies.
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#EndSARS: Projected Rise in Claims to Pressure Insurance Industry