KEYNOTE ADDRESS BY THE COMMISSIONER FOR INSURANCE, FOLA DANIEL AT THE INTERACTIVE SESSION FOR INSURANCE CORRESPONDENTS AT Le MERIDIEN IBOM HOTEL, UYO AKWA IBOM ON MAY 23, 2014.
Protocol
It gives me great pleasure to yet again warmly welcome you to this interactive session meant to engender better working relationship between us and gain deeper understanding of the workings of the insurance sector, nay the National Insurance Commission.
We have used this forum consistently in the past five years to raise public awareness on the key initiatives of the Commission aimed at further opening up the insurance market, and by extension increase the sector’s contributions to the Gross Domestic Product (GDP) of the nation.
Indeed, we have seen the impact of this annual gathering in the rich and robust reports about insurance in the media today based on sufficient knowledge gained from this forum. That is not to say that we have not had some pockets of misinformation and misrepresentation of facts either out of ignorance or sheer deliberate mischief in the media, but fact is no matter how minimal, there has been some value-added.
Thus, one of the objectives of our gathering here today is to apprise you of recent initiatives of the Commission to further enhance your understanding of developments in the insurance sector. You are all aware of the recent rebasing of the economy which now makes the Nigerian economy the largest in Africa and 26th largest economy in the world. This has placed enormous responsibility on the industry. With the old based economy, the sector barely contributed 0.7% to GDP. With the rebasing, the contribution of the sector to GDP has been further weakened. This therefore calls for more dynamic strategies to enable the sector make meaningful contribution to the GDP.
The Commission incepted the Market Development and Restructuring Initiative (MDRI) in 2009 to among others enforce compulsory insurances and eradicate fake insurances in the country. This initiative has been vigorously pursued by the Commission across the six geo-political zones of the country.
I am glad to let you know that even though the N1 trillion target is yet to be attained, considerable progress has been made given available statistics. There has been massive awareness about the compulsory insurances within and outside the industry. This is evident in the number of policies written by companies under this class of insurance between 2009 and 2012 which rose sharply from 72,180 to 152,181 a whopping increase of 111%.
Considerable progress was equally recorded in the volume of premium written under this class of insurance during the period. It rose sharply from N14.93 billion in 2009 to N28.68 billion in 2012, an increase of 92%.
Equally encouraging is the fact that the underwriting companies appear to have risen to their responsibility of claims settlement under the compulsory insurances’ scheme. This is evident from the impressive rise in the volume of claims paid during the period.
Going forward, the Commission would consolidate on the gains made so far and ensure proper implementation of these compulsory insurance products to be able to enhance the industry contribution to GDP.
An emerging fact under this class of insurance is the interest currently being shown by various governments. It will interest you to know that a group of underwriters have come together to enforce the Motor Vehicle Third Party Liability Insurance in Imo State in collaboration with the State Government and the scheme is working very well. Another group of 19 underwriters are enforcing the Occupiers Liability Insurance in Enugu State in collaboration with the State Government. And the Commission is working to get more states to embrace these models.
We also recognized the need to develop the retail insurance market which has remained grossly untapped considering the vast population of the country. And as part of the Commission’s strategy of Financial Inclusiveness the Micro Insurance Scheme and the Takaful Insurance were launched late last year. Every effort is being made to ensure they make the desired impact in the industry. I am please to let you know that on April 23, 2014, the Commission formally launched the Delta State Micro Insurance Scheme at a colourful ceremony in Asaba, the State Capital.
Efforts are being made to replicate this model in other states. The Commission has set up an industry steering committee for Micro Insurance under the chairmanship of Mr. O. S. Thomas, Director General (DG) of the Nigerian Insurance Association (NIA).
The Takaful Insurance project is also being pursued with great vigour. A good number of companies have indicated their interest in this line of insurance. A recent survey reveals that Muslims in the country are willing to buy Takaful products and are in dire need of such alternative to conventional insurance. This is an indication that there is a ready market for this line of insurance business and the Commission is determined to bring such Muslim faithful within the financial community in line with its financial inclusion strategy.
Let me re-emphasize that as a regulatory body, our primary responsibility is to protect policyholders and safeguard investments. We have tried to ensure this in the provision of adequate regulations and effective supervision of the industry over the years.
Suffice it to say that the Nigerian insurance industry has witnessed considerable metamorphosis in recent times owing to the new reforms embarked upon by the Commission. Some of these reforms include but not limited to the introduction of Risk Based Supervision, migration to International Financial Reporting Standard (IFRS) from the Nigerian Generally Accepted Accounting Principles (NGAAP); Market Conduct Reforms, Claims Settlement Reforms, Financial Inclusion, Combating financial crime etc, all geared towards developing the industry and improving the general perception about insurance.
I must also mention that the successes achieved so far in this drive by the Commission may not have been possible without the unflinching support of the industry operators. Where necessary, the Commission has not failed to open lines of discussion with the operators, especially through the NIA, NCRIB, ILAN and ARIAN on issues affecting them before arriving at decisions.
We are aware that insurance is a business of selling promises. But when these promises made to policyholders and investors are not kept, it then becomes NAICOM’s business to intervene and ensure these promises are kept.
In doing this, there is always going to be tension, apprehension, disagreements, etc between the regulator and the stakeholders. This is healthy if only to engender transparency, good corporate governance, better management and appreciation of the laws governing the business.
Let me inform you that notwithstanding the resistance from these entities, the Commission remains committed to providing leadership to ensure sanity, good ethical practices, development and growth in the industry.
And I think the media has a major role to play in this regard. I believe the media should be able to collaborate with the Commission in raising sufficient insurance awareness, sensitization and education on insurance, financial literacy, benefits of insurance, claims processes and rights of the policyholder.
So far we say thank you but we crave for more support. The economic growth which is central to the government cardinal agenda will be enabled faster and in a sustainable manner, if insurance is developed as a driver of economic emancipation.
Commission commenced the implementation of section 50 (1) of the Insurance Act 2003 on January 1st 2013 to put a stop to the vexed issue of delayed or non-payment of claims.
The on-going implementation of this law has significantly improved the cash flow of insurance institutions in the country. It is expected that this positive turn of events would impact on the capacity of operators to settle claims promptly, thus removing a major sore point in the relationship of insurance consumers and service providers.
Conclusion: the Nigerian insurance sector has great potentials for massive growth. You will agree with me that the population size of the country, if adequately harnessed, gives an added advantage to the insurance industry to further develop its market. This is what we intend to achieve with the various initiatives incepted by the Commission in recent times. I am encouraged that all of these and many other initiatives assure us of an evolving insurance model, a better insurance industry, a growing market and a brighter future. We will definitely appreciate the unflinching support and cooperation of all of you in this drive.
Thank for listening.
Fola Daniel
Commissioner for Insurance
No comments:
Post a Comment