How Govt underdeveloped insurance sector

The insurance industry needs the support of the government to surmount the enormous challenges that have stalled its growth and development. But, over the years, the government has shown little or no concern to the wellbeing of the sector, which ought to be the fulcrum of the economy. Chuks Udo Okonta, writes on how the government can help reposition the fortune of the industry.

 

The Government is expected by law to oversee the wellbeing of people and provide favourable environment for businesses to thrive in an economy. Insurance business which is classified as part of the financial sector of the economy, has over the years, being struggling to take its rightful place, but has been stemmed by challenges which have their roots in government’s activities.

Prominent among the issues the industry is contending with are, lack of enforcement of laws; poor patronage; non payment of premium; weak laws and unfavourable environment.

Government officials take delight in referring to the sector as the poor cousin of the banking sector, but never lend their support to moving insurance forward like the banks.

The struggle to reposition the industry has led to some reforms, but the reforms have failed to meet public expectations, due to lack of enforcement and compliance by the government.

Considering the importance governments in other climes place on insurance, it is regrettable to say that the government is not doing enough to prop insurance to lofty heights.

In the United States, the support being giving by President Barack Obama has helped many Americans secure health insurance under the Obamacare initiative. President Obama leverage all channels especially the social media to sensitise the public on the need for the policy, and in spite opposition in some quarters more American, have been covered by the policy.

In Nigeria, we have never had a leader who is passionate about insuring the people. If leaders across the three federating units – Federal, State and Local Government, have shown enough concern to the development of insurance, the menace of low awareness stemming the sector would have been eradicated.

It is expected that the government would this year have a rethink on how to manage the affairs of the industry, and help tackle these challenges.

POOR PATRONAGE

Government is considered the highest spender, but the insurance industry cannot be said to have enjoy the largesse of the government as most of its properties are uninsured. For the few properties that are insured they are under-covered due to corruption. If the industry is to take its rightful place, the government should set the example by ensuring that all insurable properties are properly covered.

NON PAYMENT OF PREMIUM

Though the No Premium No Cover is expected to curb this menace of non payment of premium by the government and public, over the years, the government has done the industry more harm by failing to honour its premium obligations.

It was learnt that insurance companies that underwrote the Federal Government’s 2012 group life policy are yet to be paid about N3.56 billion, as at today.

A broker who pleaded not to be named, said the government has paid about N5.13 billion which is 59 per cent out of the total sum of N8.7 billion, leaving N3.56 billion – 41 percent unpaid.

Former President Nigerian Council of Registered Insurance Brokers (NCRIB) Mrs Laide Osijo, said the delay or nonpayment of 2012 outstanding is unhealthy for the industry’s development.

"I want to appeal to the Federal Government for the release of outstanding premium on group life for the year 2012. As it stands, only 41 per cent of the premium has been paid remaining 59 per cent to be paid.

"This situation has made many insurance companies to discountenance claims under the year in review of the now existent No Premium No Cover. This, as we are all aware, is to the displeasure of some beneficiaries especially to those who died in active service.

"The impression many of them have is that the insurance industry is insensitive to their plights, a situation that creates serious image smear for the industry," she said.

She called on the government to assist the industry to avoid further accumulation of unpaid premiums and claims, adding that such could negate the new premium collection system.

Osijo said the initial apprehension on the workability of the no premium no cover policy is gradually being laid to rest as brokers and underwriters now testify of the gains from the initiative.

Managing Director LASACO Assurance Olusola Ladipo-Ajayi, said the nonpayment of the premium is inimical to the industry’s growth. He maintained that there is the need for a review of the premium adding that the present group life premium is undervalued.

LACK OF ENFORCEMENT OF LAWS

The inability of government to enforce insurance laws remains a major set-back to the industry’s growth. Promulgation of compulsory insurance laws has helped the industry a little due to failure to enforce the law. The basic compulsory insurances are not bought, because there are no measures to penalise those who subverts the law. Government’s failure to enforce these laws has made some fraudulent agents to eke a living from the gaps by collecting the money that would have go to the insurance sector. Government’s failure to adhere to the laws has also made it difficult for it to properly carry out enforcement.

 

WEAK INSURANCE LAW

Efforts to enact new insurance law that would change the face of the industry have failed to receive the blessings of the government. This really shows how much interest the government places on the industry. Insurance bill drafted by some egg heads have been gathering dust since it was submitted to the government over four years ago.

Now that the government is focused on 2015 election, insurance practitioners have to wait and wait as there is no sign of sending the bill to the National Assembly as at the moment.

 Managing Director Riskguard-Africa Nigeria Limited, Yemi Soladoye, said principally, insurance law is narrow and restrictive in so many areas though it has being reviewed, adding that until the new one is out, the present Act does not give the regulator enough power to executes its obligations.

“Go through the relevant part of the law, the stages the regulator will go through before it can withdraw the license of an erred operator, it will take NAICOM five months before the process is complete to  revoke the license of an operator and thereafter the Minister of Finance can still reverse the decision. Originally, a regulator in that kind of environment will see that exercise as a career threatening venture.

“The regulator in Nigeria is sometime put in the middle and will be asked to state its side and the operator to also state it own whenever there is need for the regulatory to take action; with that, why do we call such body a regulator?, he added.

 

UNFAVOURABLE ENVIRONMENT

In spite the insurable potentials provided by the nation’s population, insurance can never thrive amidst poor people. Presently, the business is patronised by few elites and the situation can be revised if the populace are drawn out of the web of poverty. It behoves the government to create favourable environment that would push the downtrodden to a level of affluence.

CONCLUSION

The development of insurance industry is a responsibility the government should give priority. This is because the wealth of the nation can only be sustained when people leverage insurance to mitigate their risks. And only a viable insurance industry can meet its claims obligations.