Expert calls for increase risk transfer in industry
Released on 09 Apr 2009
A DIRECTOR of Fountain Insurance Brokers Limited, Mr. Kola Adesina, has emphasized the need for the society to ensure proper risk management by placing their risks with the insurance companies.
He said that proper risk management ensures maximum sustainable value to all activities of the organisation, increases the probability of success and reduces the probability of failure and uncertainty of achieving the organisation's overall goal.
Adesina made this statement during a public lecture on insurance appreciation organised by the company in Lagos.
He said: "The aim of risk transfer is that if a risk occurs, someone else should be responsible for paying for it. The loss is transferred not the activity itself."
Adesina explained that insurance is the most widely used of all risk transfer methods because for an exchange of certain premium, the insurance company agrees to meet the uncertainty of the insured.
According to him, in contributing to the general reduction in economic waste, insurers have vested interest in risk to improve the risk they insure.
He emphasized the need for individuals and corporate organisations to value their assets and ensure that they insure them adequately.
He added that to achieve a reasonable level of risk management, there was the need to improve moral hazards.
Collaborating him, the Executive Director, Operations, Mr. Adedayo Ojo, said that insurers are able to bear a huge risk because of the law of large number.
While mentioning the constituents of insurable interests, he said these includes life, property, potential liability, rights or financial interest capable of being insured.
The insured, he added, must stand in a relationship with the subject matter of insurance, whereby the benefits from its continued safety or absence of liability is prejudiced by its damage or destruction or the creation of liability.
He said, "insurance gives indemnity by restoring the insured to the same financial position after a loss as he enjoys immediately prior to the loss."
He explained that this is done through the payment of cash, replacement, repairs and reinstatement.
According to a chartered insurance practitioner, Mr. Bola Temowo, underwriters offer a promise to indemnify the insured in the event of a loss from an insured peril.
He added that it was the duty of the insured to notify the insurer of its loss in order to commence the claims procedure.
While explaining the processes of claims settlement, he said that after the insured had brought the documents needed for claims verification, the adjusters come in to interface between the insurer and the insured.
He said: "Their services are usually required in the determination of the insurers' liability and quantum of loss."
The loss adjuster, he added, may be an insurance practitioner, engineer, quantity surveyor among others.
