Chuks Udo Okonta
Federal Government has pegged the attainment of the envisaged N1 trillion insurance premium in the next three years on tackling key challenges observed to have stemmed the growth of the industry.
The Coordinating Minister for the Economy and Minister of Finance, Ngozi Okonjo-Iweala, who disclosed this in Abuja, identified the challenges as lack of consumer trust, fragmentation of the industry, low enforcement of compulsory insurance policies, lack of professionalism by some
agents and brokers in the industry, and a general shortage of skilled
professionals in the entire industry.
She noted that if the potentials of the industry must be harness, the challenges must be tackled head-on, adding that due to lack of consumer trust, many Nigerians are skeptical and hold a negative perception of the industry.
She said: "Low enforcement of compulsory insurance: I would want to touch on the low levels of enforcement of
compulsory insurance in the country. And in this case, the regulator
and most of our government agencies have more work to do.
" If you take the case of compulsory motor vehicle insurance (third-party
liability), only 1 in 8 Nigerian cars (13 percent) have genuine
insurance. Compare this to Ghana, where the compliance rate is
reportedly about 60 percent. Or take the case of mandatory group life
insurance for large businesses and organizations; again only a few
large corporates in the oil and gas sector, the Federal Civil Service
and the Police Service are compliant. Many of our CAC-registered
businesses do not comply with the law.
"Shortage of skilled professionals. There is also the third
problem of a general lack of skilled professionals in the industry –
from underwriters, to brokers, to regulators and so on. Am informed
by NAICOM that we currently have less than 10 professional
actuaries in the country! This is grossly inadequate for the type of
insurance industry we want to build in Africa’s largest economy. 7
Lessons from Banking and Pension Reforms"
She predicted that the Nigeria’s insurance industry is ready to take-off, stressing that just like the banking industry
reforms, a time will be when the insurance industry
players are strong, robust, and even begin international expansion.
"A time when our domestic insurers will begin to fully underwrite
policies for our oil & gas and heavy infrastructure sectors; when this
industry will develop skilled actuaries and underwriters who can
meet the highest international standards," she added.
She noted that to develop the potential of the industry, all stakeholders will need to work together to address the several challenges, stating that the Federal Government has an important role to play in this sector and that it will need to get better at enforcing compliance for some compulsory classes of 10
insurance such as for motor vehicle insurance and group life
insurance.
She said the government will also need to clarify various regulations, for example on bancassurance and the use of corporate agents. And will need to
work on strengthening the supervisory powers of NAICOM.
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