By Nike Popoola

Monday, 13 Dec 2010

The Market Development and Reconstructuring Initiative is NAICOM’s initiative aimed at deepening insurance penetration in the country. NIKE POPOOLA reports its components and how all the sectors that make up the insurance industry are contributing to the scheme.

Early this year, when the National Insurance Commission came up with the Market Development and Reconstructuring Initiative, it aimed at achieving some objectives.

The objectives include: raising the industry’s gross premium from N164.5bn in 2008 to N1.1tn by 2012; creating about 250,000 new jobs in the sector; and gaining an increase in insurance contribution to the Gross Domestic Product from the current 0.72 per cent to over three per cent, with an increase in insurance premium per capita from the current N1,200 to N7,500 by 2012.

The components of the MDRI project also include the enforcement of compulsory insurance policies in the country’s laws, sanitisation of the industry, modernisation and expansion of the insurance agency system.

The MDRI also seeks to, among others, wipe out fake insurance institutions in Nigeria, ensure the adoption of risk-based supervision and solvency-focused regulation by the insurance industry, bridge the skills gaps in the young insurance practitioners and build consumer trust and confidence in the insurance mechanism.

The Commissioner for Insurance, Mr. Fola Daniel, says the industry provides succour to the bereaved, protects the country‘s national wealth and makes employers and professionals to be alive to their responsibilities and to fellow citizens.

He says, “It is our strong belief that if the provisions in the existing laws for compulsory insurance are rigorously enforced and the agency’s system of insurance marketing is reformed, while the approach to insurance regulation and supervision is made more effective and operators-friendly, the ideals implicit in the MDRI initiatives will be realised.”

According to him, with the cooperation of all stakeholders in the project, the industry will meet the deadlines set for achieving its FSS 2020 initiative.

The President, Association of Registered Insurance Agents of Nigeria, Mr. Kingsley Obuvie, says that the insurance agents are relevant as they act as intermediaries between the insurance company and the customer.

According to him, ”We represent both the insuring public and the insurance companies on deliveries of insurance products. We serve both the customer and the insurer to ensure customer satisfaction.”

He says that ARIAN intends to collaborate with NAICOM to ensure the success of the MDRI, provided that all the grey areas, currently being looked at, are adequately addressed so that all the stakeholders in the industry can embrace the NAICOM initiative.

Obuvie says, “The agency system, through ARIAN, is poised to propel the repositioning of the insurance agent, with a view to deepening insurance penetration in Nigeria, hinged on increasing insurance awareness. And this will greatly assist the MDRI project.”

The President, Institute of Loss Adjusters of Nigeria, Mr. Darlington Mgbojekwe, notes that the MDRI has the potential to grow the insurance sector.

While speaking on the compulsory insurance policies, Mgbojekwe says that it is a different thing to enact laws but the enforcement is very relevant.

The President, Chartered Insurance Institute of Nigeria, Mr. Sunny Adeda, decries the low participation of Nigerians in insurance.

“Many losses have occurred in this country and people have not been compensated, despite the availability of the law,” he says.

He, however, stresses the need for the enforcement of the compulsory insurance policies in the country.

The Chairman, Nigerian Insurers Association, Mr. Olusola Ladipo-Ajayi, observes that, currently, the contribution of the sector to the country‘s Gross Domestic Product is still low.

He, however, says that, with the current initiative by the NAICOM, the sector will soon achieve the trillion naira target premium.

The President, Nigerian Council of Registered Insurance Brokers, Dr. Teslim Sanusi, stresses the need for the sector to ensure increased insurance awareness penetration at the grassroots.

He reiterates the commitment of the insurance brokers toward deepening insurance penetration in the country.

Consultant, NAICOM, Mr. Yemi Soladoye, says that the first set of legislation on compulsory insurance in Nigeria focused on employer‘s liability and motor third party liability between 1933 and 1950.

Today, he adds, 16 types of insurance products are directly and indirectly made compulsory in Nigeria.

While explaining the relevance of six of the policies, Soladoye says that the Builders Liability Insurance, under Section 64 of the Insurance Act 2003, is mandatory for all owners and contractors of any building under construction that is more than two floors.

He says, ”It is to compensate the site workers or members of the public, who may die, get injured or lose their properties as a result of construction risks.

Failure to comply with this law, he says, will attract a N250,000 fine plus two years imprisonment.

Soladoye says that the Occupiers Liability Insurance, under section 65 of the Insurance Act 2003, is mandatory for all landlords and tenants of all completed buildings in Nigeria, except mosques and churches.

He says, “It ensures compensation for the users, loggers and licensees, among others, who may die or become disabled or lose their properties in case of damage by fire, storm, flood, earthquake or collapse of buildings.

The sanction for non-compliance, he adds, is N100,000 plus one year imprisonment.

Soladoye explains that the Group Life Insurance, under Section 9(3) of the Pension Reform Act 2004, compensates the families of all government and private sector employees, who may die or disappear while in service.

He notes that the enforcement is by both PENCOM and NAICOM. The negligent schedule officer, he says, may be personally presecuted.

The NAICOM consultant says that the Medical Professional Liability Insurance, under Section 45 of the National Health Insurance Scheme Act 1999, is mandatory for all NHIS accredited hospitals to compensate the patients, who may die or become paralysed due to carelessness or negligence of a medical professional in handling a treatment.

He says that non-compliance warrants prosecution for involuntary murder and revocation of operating licences.

The Employers Liability, under the Workmen Compensation Act 1987(as amended), is to compensate those who may die, get injured or contract illness while working in factories as apprentices or as domestic employees.

On this policy, he says the fine is as much as twice the amount that would have been paid as the premium.

The Motor Third Party Liability Insurance, under Section 68 of the Insurance Act 2003, he explains, is meant to compensate the road users, passengers, commuters and property owners, who may die, get injured or have their properties damaged (including other vehicles), following motor vehicle accidents.

The penalty, he says, is a N250,000 fine plus one year imprisonment.

Source: Punch