Unpaid premium can drive industry into extinction, says Daniel

The Commissioner for Insurance Fola Daniel, in this report, said the vexed issue of delayed or unpaid insurance premium has attained an alarming crescendo, threatening to drive the industry into extinction if not curbed. He also spoke on what the National Insurance Commission (NAICOM) is doing to boost the industry's profitability. CHUKS UDO OKONTA writers.

　

What is NAICOM doing to ensure government comply with the policy?

The National Insurance Commission by virtue of the provisions of the NAICOM Act 1997 and the Insurance Act of 2003 is the adviser to government on insurance matters. You may also have noticed that the Insurance of strategic Government assets has become a burning issue in the nation’s polity in recent times.

Not long ago, the Commission held a retreat for Insurance Desk Officers of Ministries, Departments and Agencies (MDAs) in Nasarawa State to amongst others; sensitize them on the need to ensure adequate insurance protection for all strategic government assets.

Indeed, there have been growing concerns over the non-compliance with the provisions of the Insurance Act in relation to payment of premium for the insurances of strategic government assets and property by the MDAs.

　

What is the commission doing about poor budgetary provisions for insurance?

At different times and forum, government has always been reminded of the need for it to show more commitment to the insurances of its assets by making adequate provisions for insurance in its annual budget. We have noticed that current budgetary provisions for insurance of government assets and properties were either inadequate or in most cases not made at all.

Besides, where the provisions are made, payments of premium to insurance companies are either delayed for months or the fund redeployed to meet other needs by ministries, departments and agencies of government which is in clear breach of Section 50 (1) of the Insurance Act 2003.

To which extent has this menace affected the industry?

The vexed issue of delayed or unpaid insurance premium has now attained an alarming crescendo, threatening to drive the industry into extinction if not curbed.

Most insurance companies make huge provisions for outstanding premiums in their books on an annual basis, which invariably affects their bottom-line and thus, their inability to make profit, pay dividends to shareholders and attract investments to enable growth. This avoidable situation is unhealthy and dangerous to the industry and it is time to put a stop to it.

　

Why has NAICOM not enforced this law in time past?

For the avoidance of doubt, let me state here clearly that the "No-Premium-No-Cover" policy is neither a creation of the National Insurance Commission nor is it a new regulation. It is indeed, a statutory provision in the Insurance Act of 2003 which is obligatory on NAICOM to ensure its implementation. Section 50 (1) of the Act says "The receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk unless the premium is paid in advance".

This is the provision of the law, and until such a time when government deem it imperative to amend the law, NAICOM, being the industry regulator have no other alternative but to implement this law.

Our business is to apprise the public on the modalities for the implementation and enforcement of Section 50 (1) of the Insurance Act to avoid gaps in the insurance cover of Government Assets. It is expected that we would have succeeded in building a healthy and mutually beneficial working relationship between the industry and the MDAs.