By NIKE POPOOLA

After introducing six major compulsory insurance policies in some states in Nigeria, the National Insurance Commission has moved to the enforcement stage. Experts highlight key points to consider at this stage. NIKE POPOOLA writes Last year, the National Insurance Commission introduced six compulsory insurance policies in five states of the country, as part of efforts aimed at deepening insurance penetration in Nigeria.

The compulsory laws are a major component of the commission’s Market Development and Restructuring Initiative, which is expected to improve insurance activities in the country.

The insurance policies are: Motor Vehicle Third Party Insurance, Builders Liability Insurance, Statutory Group Life Insurance, Occupiers Liability Insurance, Employers Liability Insurance and Health Care Professional Indemnity Insurance.

In January, the Federal Government signed an Employee Liability bill, which repealed the Workmen’s Compensation Act of 2004.

Although, the new law places the implementation and management of the Act in the hands of the Nigeria Social Insurance Trust Fund, the law still makes some provision for insurance companies in the scheme.

These compulsory policies were embraced last year by Oyo, Sokoto, Kwara and Lagos states.

NAICOM, which plans to take the intitiative to all parts of the federation, also introduced it in Enugu State this year. The MDRI’s objective is to attain a gross premium of N1.1tn for the industry by 2012. (The industry’s gross premium was N200bn in 2009).

It also seeks to create about 250,000 new jobs in the sector, while increasing the insurance industry’s contribution to the country’s Gross Domestic Product from the current 0.72 per cent to over three per cent.

Now that many stakeholders and states in the country are collaborating with the commission as regards MDRI, NAICOM is focusing on its full enforcement and implementation from March this year.

The Director-General, West African Insurance Institute, The Gambia, Prof. Mike Ikupolati, noted that “it is one thing to have laws, but it is another thing to implement them.”

He pointed out that the implementation of the policies needed better coordination, which should begin with unity in the industry.

He said, “If you want to enforce compulsory insurance policies, it has to be the collective responsibility of everyone in the insurance industry. The Nigerian Insurers Association, Nigerian Council of Registered Insurance Brokers, Chartered Insurers Institute of Nigeria, Association of Registered Insurance Agents of Nigeria, the Institute of Loss Adjusters of Nigeria and all the other bodies need to come together as one body. When it comes to something that affects the industry as a whole, we should be seen to be together and form a common goal to achieve it.”

The Managing Director and Chief Executive Officer, Mutual Benefits Life Assurance Limited, a subsidiary of Mutual Benefits Assurance Plc, Mr. Femi Asenuga, said the insuring public should be enlightened on the benefits of embracing the statutory laws.

He, however, noted that there were penalties for non-compliance with the compulsory policies.

“We should have people, who are monitoring compliance, and let people know that the government and operators are serious about ensuring that these insurance policies are in place,” he said.

He observed that for such policies, the level of compliance was usually good at the corporate level, adding that, as a result of this, “the enforcement should be felt more at the corporate level.”

While pointing out that compliance may be low at the individual level, he said there should be increased awareness as regards the associated benefits of the policies to enhance compliance by individuals.

“We need to preach the benefits; let them see why they need to buy it (compulsory insurance policy) voluntarily so that they will be able to patronise it happily. No matter the approach used, if it is not backed by sanctions, it will affect the level of compliance because some people can be difficult,” he added.

The Managing Director, Nem Insurance Plc, Mr.Tope Smart, observed that, with the MDRI, NAICOM was trying to grow the industry by ensuring that some of these compulsory insurance policies were taken up.

He noted that there were leakages in the sector’s premium generation, especially through the motor insurance policy. He, however, discouraged the use of fake insurance policies, saying the policy owners would gain nothing from them.

He called on the enforcement agents to assist insurers in ensuring that only original motor insurance policies existed in the country, urging “the Federal Government to support the industry in enforcing the building insurance laws.”

“If you look at the public buildings we have in Lagos alone, they are many. How many of them are insured? This is because nobody is going to ensure compliance. In this area, we need the cooperation of government agencies in enforcing these laws,” Smart noted.

The Managing Director, Union Assurance Company, Mr. Godwin Odah, said he believed that the commission understood the necessary steps to take to make the project successful.

According to him, NAICOM is working very hard with the government and other agencies because it can’t accomplish the goal of growing a new insurance industry on its own.

He, however, said that the insuring public must be made to see the benefits of embracing the compulsory policies before voluntarily embracing them.

He said as a result of this, the commission had been doing a lot of awareness campaign, to make the insuring public see the different benefits that the insurance companies had for different stakeholders.

“Let us take insurance more seriously because the economy will be better off for it, and by implication, the citizens will be better off for it. There has never been better insurance awareness than we have now. But we can still do better; it is a right step in the right direction,” Odah said.

A consultant to NAICOM, Mr. Yemi Soladoye, said that the industry was introducing the electronic insurance certificate and a central data capturing system.

He added that, with the new initiative, the industry would have accurate data of all its insurable risks “because it is only what is insured and the claims paid that will go into the industry’s central data.”

This system, he added, would enhance the implementation of the compulsory policies.

“When the Police are doing their inspection on motorists to confirm their electronic certificates, the central data with the NIA will supply the information when an SMS is sent to the data source to disclose if the certificate is genuine,” he said.

Soladoye said that the central data would have the record of all underwritten motor insurance, adding that the implication was that it would be impossible for “anyone to insure one vehicle in two or three places and it will be impossible to file one claim with two or three companies.”

He added that the electronic system would help to compile data of transactions done under the compulsory policies, noting that only what was insured would be found in the NIA data.

The Commissioner for Insurance, Mr. Fola Daniel, said that a formidable enforcement team, made up of all the stakeholders, had already been formed.

According to him, the team will carry out nationwide inspection of the affected properties and organisations monthly while the insurance agents will start to issue compliance demand notes to citizens and corporate bodies in Nigeria.

The commissioner said that the compulsory insurance policies were part of the NAICOM’s MDRI.

Other components of the MDRI, he added, were sanitisation, modernisation and expansion of the insurance agency system. The initiative, according to the NAICOM boss, will wipe out fake insurance institutes in Nigeria and aid the adoption of risk-based supervision and solvency-focused regulation by the industry.

Daniel said that the MDRI would also look into issues such as bridging the skill gap among young insurance practitioners and building consumer trust and confidence in the insurance mechanism.

“Before NAICOM embarks on a public launching in any state, it puts in place an enforcement body, a project implementation body, which is made up of the stakeholders, the Police, fire brigade, road safety, those in charge of building, and the insurance practitioners, who are the ultimate beneficiaries. This is to ensure that they put in place a structure that will work,” he noted.

 

Source: Punch