Regulation and Insurance Market

Regulation and Insurance Market
Growth: The Role of the Media.




Sam Chukwuka Onyeka

Paper presented @ a media retreat organized by NAICOM for Insurance Correspondents, La Meridian Hotel Uyo, Akwa Ibom State, 22-23 May 2014

　
Outline
Preliminary Remarks
Regulation and Insurance Market Growth
The Role of the Media
Conclusion
　
　
Preliminary Remarks
"Insurance market growth is mainly driven by economic factors in developed countries, whereas it is largely driven by institutional factors in emerging countries.
With economic development, the contribution of institutional factors to the insurance growth would gradually decrease and be partially replaced by that of economic factors."
-- Yongdong Liu, Peking University
　
Preliminary Remarks (continued)
Given the net positive effect of institutional factors on the insurance industry where GDP is low, it is crucial for the emerging economies to adjust their strategy in order to achieve market growth.
　
　
Regulatory Strategies that can Stimulate Market Growth
Compulsory insurances – address underdeveloped demand
Market conduct regulation- keep product simple and build trust through distribution channels
Solvency regulation- improve insurer stability and increase capacity through risk-based capital requirements- Solvency 2

Regulatory Strategies that can Stimulate Market Growth (continued)
Public risk mitigation-make risk insurable and or cover available (sustainable insurance).
Premium subsidy- can help make cover available and increase demand while maintaining fundamental principle of risk-based premium.
Public Private Partnership (PPP)- can enhance market penetration.
-Andreas Ritcher, Regulation and Insurance Market Growth:
Ludwig- Maximillians- Universitaet
　
Examples of Public Private Partnership
US National Flood Insurance Programme:
State offers insurance capacity and insurance distributed by private companies
Some policies are subsidized
Caisse Centrale de Reassurance France
Reinsurer of last resort for risks considered as "uninsurable" e.g. flood and earthquake
Compulsory private insurance with subsidized government reinsurance option
　
　
　
Examples of Public Private Partnership (continued)
Extremus-
(Terrorism Insurance Company, Germany)
Primary insurer for terrorism risks exclusively
Pooled capacity of 2 billion euro, offered by its shareholders made up of several German Insurance companies
Backed by federal capital guarantee (additional capital)
　
　
What we are doing
Implementing Compulsory Insurances
Premium subsidy via NAIC
Reinforcing Market Conduct regulation
In the early stages of Solvency 2
Deepening the market through micro-insurance and Takaful
"No premium, no cover"
Implemented IFRS
　
What we can do next
Public Risk Mitigation (sustainable insurance)
State Insurance
Public Private Partnership (PPP)
　
The Role of Media
Help grow public confidence in insurance sector
Influence positively government policies on insurance
Partner with the regulator towards enforcement of compulsory insurances
Support ongoing campaign on financial literacy and consumer protection
Take more interest in insurance matters and increase your understanding of the subject.
　
　
Conclusion
To grow the Insurance Market, Nigeria must continue to focus on institutional factors
The Media can contribute more to the growth of the Insurance Market in Nigeria.