 What's your back here with the breakfast and plus TV Africa who's speaking with Professor Kenny fair who's a developmental economist He joins us from the FCT Happy New Year Professor Ken Thank you very much. I'm happy new year to you too. All right, then let's get to this conversation with of course the Nigerian employers consultative association Saying that it's okay the adjustment in the current premium rate for Motor insurance is desirable in order to grow the economy now the quick one to this is that You know, there's been an increment which should take effect as of yesterday Which is the first of January 2023 the third party motor insurance policy Being increased from 5,000 Naira to 15,000 Naira like I mentioned earlier on First of January 2022 so apparently yesterday was a weekend and let's say today is Monday. It's a public holiday, but somehow That's what it is. What do you make of this justification and this development? There are two issues one means Is it justified to have an increase if you have not had one over the last five years the answer is yes Because you know anything is a moving target and this is a price and price subject to demand our supply issues rated interest and But the second point is what is the quantum of the increase? In three hundred percent increase is just not on you know, you shouldn't be doing three hundred percent increase You should be doing an increase, but not to the level of three hundred percent Let me explain What happens is that increases of this nature are inevitable especially when There are increases in the whole environment in the whole cost environment Both costs of services and cost of goods for example car prices have gone up phenomenally And all kinds of services have gone up goods have gone up. Yes, that's fine But how do you index and increase you have to increase the sequential you have to for example Index it to the solution Inclusion is about twenty one point six percent. Yes, you know, they should be increasing this in gradually Over time rather than take a content jump of three hundred percent increase And then when you do this even though it's within your rights You also had a duty to consult extensively the stakeholder community That you use insurance and of course neck Yet is a very close member of that community. So that's why they are coming out and supporting it But you have to consult people on what are what are the reasons for the increase which we all know And then what are the benefits are you going to increase the fabulous level agreement so that these people will become more Efficient in their position of services in the operational services Increasing their response time. Another was making it shorter so that when people complain they respond quickly Settling claims what are the service level of setting in claims? You have to bring that closer to the people So there's so many other sensitization because it's the job of my con to sensitize The country because people are only very small number of people are using insurance and service It's very good for the economy for us to increase that And so the most telling us how much are they going to invest in Sensitization because you know people that come to ensure and you know why the cost of insurance So all these are mostly addressed in one word the other but let's look at you know the Rational or some of the reasons given for this adjustment You have stated that if this is not if the agency or the association has not had an increment For a period of time then I think it's desirable to have all of that which we know that that doesn't happen in a long time But moving away they have said that this is in order to grow the economy develop the industry and provide some effective ricks To mitigate services to the generality of Nigerians Do you think that this is anything to go by? You know the argument is found is found because the bigger the number of people involved in insurance The better for the economy. Why do you insure goods insure goods? People have the safety of wanting to invest if you insure agriculture, which they are doing Then banks will learn to agriculture the farmers will borrow The farmers will go to farm with the rest of mind that if the flood comes and taking away all their plants or anything All the unexpected has had that they will not go out of business So it is important it encourages business insurance encourages the manufacturers of cars To even be able to do more business so that it generally helps the economy both the suppliers and the So it does have a huge role to play in improving customer credit You can give customer credit when you have an insurance But if they fail to pay insurance kicks in so the credit expansion of the economy is a dead by insurance So those are those are very cogent reasons. But the thing is that you don't want to create An army of people who don't want to pay the insurance because it's only about 300% and I haven't got the money So they start forging things in with evading the premium You don't do that. They take it is the same story as our First subsidy you don't wait on to the one one bank you remove the first subsidy and then everybody goes I mock the increasing gradually every three months in case you buy time But people will take the pain and they will gradually gradually rise to to the appropriate level over if you know That's more than I know that time and extend the time period not just one bank of 300% increase in price. It doesn't work like that but How would you describe, you know the level of awareness or you want to say a Culturation of insurance in terms of vehicle insurance in Nigeria. Do you think that you know? It's anywhere close to 50% Now it's very very small We didn't use like we are working around 10% of the potential customer base that they should be delivering And that is that has a knock on effect when you have a very narrowed customer base Then the economy suffers But every other person and then you too you start cutting corners You will provide the efficient service You will be agreeing with customers on each and every incident and then you will be delaying their payment and their recovery and all kinds of things imagine if if you have a terrorism insurance and Your market is a set of bliss Then no settlement for one year. They are agreeing people have lost one year livelihood You know it's simply that if you planted crops and there was a flood Then you'll be arguing with them for another one year another family season is gone And you know is not enough to the contents So it's a very vital status that underpins the rapid growth in the economy Especially in the asset of the economy So it's very important but it has to be the regular talk has to be a bit more responsible in the sense that You keep on working with them because if they have consorted the code as extensively They won't allow them to do 300% soap. They will say stag at the agate over the year You know put in 50% put in another 50% about three more six months and then until you level to Your 300 Professor if how can we develop you know this industry the insurance industry because in developed climes Is reported that it plays a major role in terms of national development among others it is a risk takeoff Right, so what can we do to develop this sector so we can contribute, you know to nation building and GDP as well Well, you know first of all you have to have consumer confidence And this this is there's anything that is going to not come through that the consumer confidence It is just this kind of action of increasingly by 300% just like that It's not it pushes a lot of people out of this or out of the Formal economy. They are now joining the informal economy of evading tax Evading insurance for the insurance that you get. That's what you push them to just because of the way you implemented Secondly You need to raise your awareness Of the benefit of this and people don't know People just don't know many people will venture into many activities If they know that there is an insurance company if you take for example A agriculture the commercial banks don't want anything to do with agriculture because they see it as a high risk area A low return But if insurance moves in it gives them the confidence to lend To the people so it is a war of the risking the the sector So insurance helps you to risk a sector And it's applicable to all sectors So, you know, so they didn't have to actually have to use about the benefit of insurance But it's just the selling of this The sensitization of the people the continuous carrying along the stakeholders as you move along And and then make sure you can be trusted because customer trust and confidence is critical Where somebody gets beaten twice on trying to make his claim and he can't get it Well, this kind of notoriety of the industry because people trust the industry They believe that any money you pay makes sure that's the money that you have lost Because they don't have any faith that you will ever secure a claim And if they have successful claims, which in short case Succeeds for claim because people need to be a fit All right So they have to Yes, we have to go now and uh professor Eiffel. Thank you so much. Uh, we're just Out of time and we hope that we can have more of this conversation in 2023 Thank you very much. All right, then. Thank you so much as well for being part of the breakfast this morning We have been speaking with a developmental economist Uh, professor can if we take a breakdown to join the newsroom at nine o'clock if you missed out on any part of the conversation That's all right to follow us on facebook twitter And instagram and do subscribe to our youtube channel at plus tv africa and plus tv africa Live, so my name is messy book will join us at nine. Thank you