New Telegraph

Compulsory Insurance: Reinforcing need for better implementation

 

 

No doubt, the insurance industry regulator, National Insurance Commission (NAICOM), has remained committed to seeing Nigerians and their investments given the necessary insurance protection in the face of unexpected calamities. Sunday Ojeme reports

 

 

With years of campaign and taking the benefits of insurance to the doorsteps of the citizens, NAICOM has remained one of the financial institution regulators to see its mandate through despite growing apathy for insurance from the public.

 

Despite the benefits encapsulated in the Compulsory Insurance policy, Nigerians, over the years, have failed to embrace it. Commitment Not giving up on seeing every Nigerian properly covered with regard to life and businesses, the regulator, last week, reawakened the initiative to whip the state governors into line as far as implementing compulsory insurance in their domains is concerned.

 

The step taken by the Commissioner for Insurance, Mr. Sunday Thomas, is coming about two or three years after the commission did the same with the Kaduna State Government. In the current dispensation, Thomas visited the Ekiti State Governor, Kayode Fayemi, who is also the Chairman of Nigerian Governors’ Forum. During the visit, he hammered on the need to domesticate compulsory group life insurance and other insurances in all states, stressing that governors should create structures for the enforcement.

 

According to him, “over the years, the commission has embarked on series of programmes aimed at a nationwide massive public enlightenment with respect to compliance with the laws on compulsory insurances. “In consequence of the losses, the victims are prone to sufferings which in many cases may lead to total impoverishment.

 

“The objectives of protecting third parties and relieving the government of the avoidable burden of compensation from the meagre wallet of the government led to the enactment of various laws on compulsory insurance products. “It is on the strength of the above that the commission is seeking collaboration with the state government in the enforcement of the above mentioned compulsory insurances in the state.

 

“As the Chairman of the Nigerian Governors’ Forum, there is no better place to start the campaign than Ekiti State.’’

 

Apathy/losses

 

Besides the poor gross premium report from the industry, irrespective of the economy being recognised as having the biggest potential in the continent, the attitude of Nigerians towards insurance also poses grave concern to the regulator as uninsured individuals and businesses lose out unnecessarily in the event of disaster or death.

 

Consistently, some Nigerians have been seen wailing over losses, which ordinarily should not be if only they had their investments insured. Across the country, Nigerians from all walks of life have continued to record one form of loss or another.

 

Apart from businesses that are suddenly wiped out, properties are also either being lost to flooding, fire or other forms of disasters. In the past three years, statistics revealed that items worth not less than N30 billion had been lost by the government and individuals to the series of disasters without any form of compensation.

 

The situation is such that nobody, rich or poor, is immune to these disasters and other forms of calamities. Besides such catastrophe, like flooding, fire, building collapse and others, sudden death and permanent disabilities in the course of duty have also risen in recent time due mainly to economic and social challenges as well as frustration. It is on this ground that Thomas, in January, in Kano, made it clear that the commission would vigorously pursue the enforcement of compulsory insurance policies, and going forward.

 

Reforms

 

In the past, and even till this moment, series of reforms by NAICOM and the Nigerian Insurers’ Association (NIA) have been put in place to encourage Nigerians to take policies to their advantage. Specifically, the Market Development and Restructuring Initiative (MDRI) is one step taken by the commission to drive compulsory insurance.

 

The MDRI is aimed at addressing the issues of compulsory insurance products, insurance agency system, fake insurance institutions and rusk based supervision. It is a plan that aims to bring about necessary reforms in the areas of industry capacity, market efficiency and consumer protection in the Nigeria insurance market. However, despite its potential for the industry, consumers and the country at large, its implementation still remains abysmally low.

 

While acknowledging challenges that had stalled implementation of compulsory insurance, Thomas said adequate measures had now been put in place to ensure every stakeholder gets involved in 2020. “Going forward, we shall vigorously pursue the continued implementation of Compulsory Insurances in every nook and crannies of the country.

 

We are certainly not unaware of the challenges inhibiting the successful implementation of these classes of insurance thus far hence, our resolve to work with relevant stakeholders to ensure a seamless drive. “Indeed, the successful implementation of compulsory classes of insurance across the nation will ensure adequate protection of our strategic National Assets. We will be working with the relevant security agencies to guarantee effective and efficient monitoring of compliance,” he noted.

Compulsory policies

 

According to the Insurance Act 2003, Statutory Group Life Insurance requires that in addition to the statutory pension contributions that employers and employees must remit, the employer is also to make group life premium payment in favour of the employee for a minimum of three times his annual emolument.

 

Employee’s Compensation, which replaced Workmen Compensation is to ensure that adequate compensation is to employees or their dependents for any injury, disease or disability arising in the course of the employee’s engagement. The Occupier’s Liability insurance requires that all public buildings are insured against various hazards such as building collapse, fire, earthquake, storm, and flood.

 

The same goes for the Motor Vehicle Third Party cover, which requires that no person shall use or cause any  other person to use a motor vehicle unless such a motor vehicle is insured against damage to the property of the third party.

 

These are some of the policies and the attendant benefits, which a larger percentage of Nigerians have neglected to their peril. In this scenario, employees who are outside the Group Life cover are tactically denied their actual benefits and only compensated based on the personal consideration of their employers.

 

In this case, what should have gone to their families in the case of death is held back due to their failure to identify with the policy. In face of challenging developments, there is obviously no better time to embrace compulsory insurances than now.

 

Awareness drive

 

As a matter of commitment, and recognising the importance of the products in the Act, NAICOM had come on several fronts to sell the gains and benefits encapsulated in compulsory insurance model to the public. Despite the aggressive campaign and efforts by individual companies, policies in the Act have continued to remain stunted and difficult to sell.

 

Challenges

 

The reasons for this are not farfetched. Beyond apathy that has been widely acknowledged, just as Governor Fayemi said, the inability of operators to also design products to meet the immediate needs of the insuring public has been largely identified as one obstacle militating against the success of the model.

 

Besides the Motor Third Party policy, which sells faster than others for obvious reasons, the other policies have been left at the whims and caprices of those who are supposed to facilitate the process.

 

Apart from the Federal Government that is more active in the Group Life segment, most  private sector employers believe their employees should consider themselves lucky having a job than requesting for other benefits. In the same vein, most tenants, who are supposed to benefit from the Occupier’s Liability policy, have lost their properties to the carelessness of office complex owners without any form of compensation while artisans and hapless Nigerians, who are supposed to be compensated under the Builder’s Liability policy, have either been killed or become permanently disabled due to building collapse.

 

Experts’ view

 

To ensure the success of the model, the Managing Director/ Chief Executive Officer, Riskguard Africa, Mr. Yemi Soladaye, believes that the training and engagement of enforcement agents have become too urgent in the face of the overwhelming apathy.

 

According to him, “it is not something new. It is not something we are just introducing. Let us concentrate on enlightenment. Going by our products, we have about four enforcement agencies, the Fire Service, Federal Road Safety Commission (FRSC), Council of Registered Builders of Nigeria, and the police.

 

“We have these people as law enforcement agencies that have one statutory role or the other to play in respect of compulsory insurance products.”

 

Last line

 

Now that the regulator has seen the need to prop the state governors into action, it should not relent but ensure a committee is put in place to continuously liase with states on the implementation of the policies.

 

Moreover, NAICOM should also ensure that underwriters celebrate their claims payment profile elaborately. Besides issuing figures in billions of naira for the public to see, policyholders, who are willing, should be called out as testimonials to that effect.

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