The nation’s
insurance industry is set to benefit from the sector’s huge income
potential from compulsory insurances, following a new initiative by the
National Insurance Commission (NAICOM) to engage stakeholder partners, pensioners, health professionals, construction workers, among others, for better enforcement.
The implication is that any moment from
now, the new partnership of the regulator with the different compulsory
insurances in the country, including motor third party insurance
–section 68 of the Insurance Act 2003; Group life insurance, in line
with the Pension Reform Act 2004; Buildings under construction-section
64 of the Insurance Act 2003; and health care professional indemnity
insurance- section 45 of the NHIS Act 1999 are expected to improve on
the premiunm income of the operators.
Analysts who spoke to BusinessDay said
the potential of the market for growth is huge, observing that the
enforcement of the different insurances would kick-start a new phase of
opportunities for growth and expansion of the sector.
BusinessDay investigation reveals that
the multibillion naira business had been bedeviled by lack of
enforcement mechanisms, particularly the Insurance Act 2003 which has
been described as weak.
The new approach by the commission,
according to some industry players, would increase sensitivity,
awareness, spread and bring about broader legal backing and enforcement
for better penetration.
Analysts further said that the new
approach, if executed properly, would swell the premium income of the
operators, as well as engender penetration and deepen the market.
“In South Africa, we have just one
compulsory insurance product and that is motor third party. So, for
Nigeria, this is great opportunity to boost their premium income and
lead the rest of Africa”, says Lelo Ntshalintshall of the South Africa
Insurance Association (SAIA).
Ntshalintshall further said efforts are
now on to make more insurances compulsory in the South African market,
but hinged on adequate legislation for effective enforcement.
Fola Daniel, commissioner for Insurance
said NAICOM reviewed its initial strategy under MDRI and discovered that
the result on direct enforcement was not speedy as expected.
“We have sat down to re-evaluate that
strategy to know whether it’s working or not? Yes, but not at the pace
we expected. What we have been doing in the last few weeks was to engage
our partners and stakeholders.”
Daniel said for Motor third Insurance, the first stakeholder is the Federal Road Safety Commission (FRSC).
“We then engaged them that this is your
baby; you have the duty to enforce it to ensure that people are taking
motor insurance. And so we asked the Nigerian Insurers Association (NIA)
to collaborate with them and I’m glad that the NIA collaborated by
giving them handset devices to enable them conduct on-the-spot checks to
authenticate whether the motor insurance policies people are carrying
are fake or not,” Daniel stated.
On the public building and buildings in
course of erection, he observed that the law recognises the Federal Fire
Service as having a significant role to play and also assigns to them a
proportion of insurance premium generated by insurance companies, to
enable them maintain their fire equipments. “So, we engaged them, that
look, if you collaborate effectively on the implementation of compulsory
insurances of public buildings,you will be able to make more money in
such a way that you don’t need to rely on government budget to carry out
your duties and they are keying into it.”
This August, there is going to be a
conference of all fire services in Minna, and heads of all fire offices
will be in that conference and NAICOM will sponsor it, Daniel disclosed.
“For pensions, it is not even my primary
responsibility to ensure that people comply with group life but it is my
business because a product of group life is insurance”. So, if a lot of
Nigerian employers are taking group life for their workers, insurance
will become bigger. And that is why we entered into strategic alliance
with the Nigerian Labour Congress.”
When we sponsored their conference last
year in Enugu, we told the Congress that this law has been made for the
benefit of their people and that if an employer is not putting in place
group life for workers, those employees are short changed. And we told
them the benefits and they have the lists of companies employing them
and they are checking for us.
“What we did is to pioneer that but
ideally it is the National Pension Commission (PenCom), that should be
driving it, but we are partners in progress, Daniel observed
“If you look at Section 9 of the NHIS
Act, it provides that every medical service provider must have a
Professional Negligence Cover, which means if a nurse injects somebody
wrongfully and it causes paralysis, insurance will pay and that is if
Professional Negligence Cover is instituted.
“So we had a meeting to
see how we can make these hospitals comply and I think they provided
the list to NIA to follow up. My duty is discharged as far as that is
concerned.
According to Daniel, using these
stakeholders “to achieve what we want to achieve will be more effective;
it’s cheaper and faster and all the organisations we have approached
are very, very enthusiastic, and they are working. “We think that with
the revised strategy we should get a better result”.
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