Insurance and risk management business Mansard Insurance’s half-year earnings were among the affected, after they saw their gross premium fall 4.3 per cent to 7.5 billion naira.
“If you recollect, the regulators of the insurance industry came up with the no-premium policy and no-cover policy, and essentially what this means is that unlike previous years, where large corporates would book cover and during the course of the year gradually pay down on the premium receivable, this year you have to pay for your insurance cover before you actually accept cover,” Mansard Insurance chief client officer Tosin Runsewe told CNBC Africa on Monday.
“The implication of this is that a lot of large corporates have then restructured their insurance programmes such that some of them now spreading their policy above four quarters, some of them are doing it on a half-year basis .”
Transactions that would have booked premium income forward in January are now being booked every quarter. This has resulted in a significant slowdown in the turnover coming from the large corporates.
Mansard Insurance reported a 55 per cent increase in half-year earnings per share to 14 kobo as well as a 104 per cent increase in pre-tax profit to 1.8 billion naira. The company is also proposing a dividend of 4 kobo per share.
“If you also think about the cash implication for a lot of the large corporations, you’re talking about large amounts of money. For some of them who are really very keen on managing their cash flow, they are still buying the policy but they pay over a period of time, accepting cover for 90 days and then after 90 days is another. That’s what we’re beginning to see,” Runsewe explained.
“Some of the retail customers who already were enjoying this sort of programme, there has been no change for them, with some of the retail customers that would pay one year ahead, some would pay on a monthly basis and use direct debit. We’ve seen the continued growth for Mansard in that area. The major change has come from the corporate market.”
One of the biggest problems in the insurance industry has been the large receivables which the industry traditionally had. Mansard saw a 66 per cent drop in trade receivables for the half-year last year and half-year this year, which has resulted in better cash flow.
“Once we go past this year, which is the correction year, I think growth would return to the industry as a whole and definitely to Mansard,” he said.