Lloyd’s insurers face COVID-19 related claims from approximately 14 categories of insurance, said Chief Executive Officer John Neal during a media call to discuss the market’s 2019 results.
Neal said it is too early for the market to assess the likely quantum of insurance losses from COVID-19, but a whole range of classes of business would be affected. He emphasized that Lloyd’s is treating the COVID-19 crisis as it would any other form of catastrophic loss.
In the main, Lloyd’s expected losses will arise from lines such as event cancellation insurance, travel insurance, medical malpractice, workers’ compensation and employers liability from groups such as health care workers and airline flight attendants, Neal said.
Neal confirmed that other areas of exposure include potential lawsuits from general liability claims against cruise companies and hotels, for example. And then there are the economic losses affecting directors and officers, trade credit, political risk, surety and mortgage.
He said the market’s immediate concerns were on the effects of the economic crisis on the balance sheet, rather than on the P&L from underwriting.
Lloyd’s central solvency ratio was 205% on March 19, dropping from 238% in 2019, while the market-wide solvency ratio (covering individual syndicates with their own reserves) dropped to 146% from 156% last year, which is still robust according to Solvency II standards that require a ratio above 100%.
During the Q&A, Neal noted that event cancellation insurance is the easiest line “to get your arms around,” which will include the Olympics, Wimbledon and the Glastonbury music festival in the UK.
“We are an insurer of event cancellation but not as big as the Munich Re’s and Swiss Re’s of this world. It’s not our over-arching issue.”
Swiss Re announced recently that it has an estimated overall market share of approximately 15% to event management and cancellation covers that could be claimed due to COVID-19. Before the Tokyo Olympics were postponed, John Dacey, group chief financial officer, said, Swiss Re has a specific exposure of $250 million to the Games. With postponement, analysts agree, the insurance exposure is less than it would have been if the event were canceled.
Dacey went on to say that the company has an exposure somewhere in the middle between $100 million and $999 million for other events scheduled over the rest of the year, split between its Corporate Solutions and P&C Reinsurance units for other events scheduled over the rest of the calendar year.
Munich Re has not yet released any numbers connected to COVID-19, although it said in a recent statement that the group’s economic position remains strong even in the current circumstances. “Even in the very unlikely scenario of a worldwide pandemic equivalent to a 200-year event, insurance claims are expected to be similar in scope to a medium-sized natural catastrophe in property-casualty reinsurance.”
Neal said the market would communicate its market losses in early May, having learned the lesson of the 9/11 terrorist attacks when losses were released too soon and had to be adjusted. “It’s tempting to rush out with a figure but there’s nothing worse than rushing out with the wrong figures. So, let’s make sure we get the numbers right before we go forward.”
FCCPC: Electricity Topped Consumers’ Complaints In 2020
The Federal Competition and Consumer Protection Commission (FCCPC) says it received the highest consumer related complaints from the electricity sector in 2020.
Speaking in Abuja on Sunday, Babatunde Irukera (pictured), chief executive officer of FCCPC, said the banking and telecommunication sectors ranked second and third respectively on the complaints chart.
He added that the aviation sector was ranked fourth.
“Our complaints resolution team is still a very small team of people and they are dealing with thousands of complaints,” Irukera said.
“We are looking at expanding capacity to have more hands handling the complaints but the real game changer in handling complaints better and faster is for companies to start doing it.
“The person who has the least open complaint in our resolution team has about 800 complaints across sectors and that is one person. If you multiply it by 12 to 15 persons, you will imagine the number of complaints.
“Being able to expand to a point where we are able to operate more efficiently, we will keep training, leveraging technology, the more we leverage technology, the more efficiently we can do our work.”
The commission was established by the 2018 Federal Competition and Consumer Protection Act (FCCPA) to promote fair, efficient and competitive markets in the Nigerian economy, facilitate access by all citizens to safe products, and protect the rights of all consumers in Nigeria.
FEC Approves CBN’s Request To Renovate National Theatre For N21b
Lai Mohammed, minister of information and culture, said on Wednesday that the Federal Executive Council (FEC) has approved a memorandum of understanding (MoU) between the Central Bank of Nigeria (CBN), and the ministry of information and culture for the renovation of the National Theatre in Iganmu, Lagos.
He spoke at the end the weekly FEC meeting in Abuja.
The federal government, on July 12, 2020, handed over the national theatre to CBN and the bankers’ committee to signify the kick-start of the renovation process.
“This is a landmark approval because, it has paved the way for investment in the creative industry as part of the resolve of this government to create at least one million jobs in the next three years in the creative industry,” Mohammed said.
“The CBN and banker’s committee are willing to invest N21.894 billion to renovate, refurbish and commercialization (run it profitably) of the national theatre complex. The MoU has a life span of 21 years after which it will revert back to government.”
The minister assured that no job will be lost after the national theatre is renovated, adding that the “brand new national theatre, an event centre” will instead create more jobs.
Asides from this, FEC approved about N9.43 billion to complete the digital switch over (DSO) in broadcasting; N8.98 billion for a new national ICT park in the federal capital territory (FCT) to coordinate public and private ICT hubs in Nigeria.
The council also approved a new national policy on aging which would take care of the needs of the aged people across Nigeria; approved the ministry of water resources memo to construct Damaturu water supply project in Yobe state worth N8.43 billion.
Adesina identifies Debt Service As Greatest Risk To Nigeria
The President of African Development Bank (AfDB), Dr. Akinwunmi Adesina, has warned that debt service is Nigeria’s greatest risk, even as he urged the federal government to take steps to increase tax revenue in the face of dwindling oil income.
The Director of Communications and Liaison of the Federal Inland Revenue Service (FIRS), Mr. Abdullahi Ahmad, stated that he spoke virtually at the recently held First Annual National Tax Dialogue .
Dr. Adesina was quoted as saying that due to the impact of the COVID-19 pandemic, Nigeria’s economy shrank “by 3% in 2020 on account of falling oil prices and the effects of the lockdowns on economic activities,” adding, “with shrinkage in oil revenues, debt service payments pose the greatest risk to Nigeria.”
He stressed further that for Nigeria to overcome the pandemic, “taxes must form a significant percentage of government revenue. Digitalization of tax collection and tax administration is critical to ensure greater transparency of the tax system, widening of the tax base, while mitigating compliance risks and encouraging voluntary tax compliance.”
Tax experts and stakeholders at the event called for the automation of tax collection by the FIRS through data and intelligence in order to ease tax collection, as well as, improve revenue.
Executive Secretary, African Tax Administration Forum (ATAF), Mr. Logan Wort, harped on the place of technology in generating revenue for the country in a post-Covid economy.
Mr. Wort, who joined the dialogue virtually from South Africa, stated, “Domestic Resource Mobilisation (DRM) is expected to contribute at least 75% to 90% on average per country” in the post-Covid era, adding that Nigeria and other African countries should note, “improved tax revenue will have to take prime position” in the scheme of things.
He urged Nigeria to pay serious attention to e-commerce and the digital economy sector where big, trans-national digital conglomerates like Google, Netflix and Uber operate and make huge, tax-free profits as a possible way of increasing tax revenue generation.
He said Nigeria should borrow a leaf from Ghana in e-commerce taxation, projected to fetch Ghana $450 million in annual tax revenue.
Ekiti State Governor, Dr. Kayode Fayemi, who was chairman of the Dialogue, was quoted as lauding the FIRS “for its performance in the 2020 fiscal year, despite operating in the most challenging period. The Service not only collected N4.9 trillion in taxes, achieving 98% of its target; only 30.6% of this was attributed to Petroleum Profits Tax, from what used to be over 50%”.
He urged participants to, “interrogate how Nigeria can further deepen the use of technology to improve tax compliance nationally and across sub-nationals.”