The nation’s insurance industry is set to benefit from the sector’s huge income potential from compulsory insurances, following a new initiative by the National Insurance Commission (NAICOM) to engage stakeholder partners, pensioners, health professionals, construction workers, among others, for better enforcement.
The implication is that any moment from now, the new partnership of the regulator with the different compulsory insurances in the country, including motor third party insurance –section 68 of the Insurance Act 2003; Group life insurance, in line with the Pension Reform Act 2004; Buildings under construction-section 64 of the Insurance Act 2003; and health care professional indemnity insurance- section 45 of the NHIS Act 1999 are expected to improve on the premiunm income of the operators.
Analysts who spoke to BusinessDay said the potential of the market for growth is huge, observing that the enforcement of the different insurances would kick-start a new phase of opportunities for growth and expansion of the sector.
BusinessDay investigation reveals that the multibillion naira business had been bedeviled by lack of enforcement mechanisms, particularly the Insurance Act 2003 which has been described as weak.
The new approach by the commission, according to some industry players, would increase sensitivity, awareness, spread and bring about broader legal backing and enforcement for better penetration.
Analysts further said that the new approach, if executed properly, would swell the premium income of the operators, as well as engender penetration and deepen the market.
“In South Africa, we have just one compulsory insurance product and that is motor third party. So, for Nigeria, this is great opportunity to boost their premium income and lead the rest of Africa”, says Lelo Ntshalintshall of the South Africa Insurance Association (SAIA).
Ntshalintshall further said efforts are now on to make more insurances compulsory in the South African market, but hinged on adequate legislation for effective enforcement.
Fola Daniel, commissioner for Insurance said NAICOM reviewed its initial strategy under MDRI and discovered that the result on direct enforcement was not speedy as expected.
“We have sat down to re-evaluate that strategy to know whether it’s working or not? Yes, but not at the pace we expected. What we have been doing in the last few weeks was to engage our partners and stakeholders.”
Daniel said for Motor third Insurance, the first stakeholder is the Federal Road Safety Commission (FRSC).
“We then engaged them that this is your baby; you have the duty to enforce it to ensure that people are taking motor insurance. And so we asked the Nigerian Insurers Association (NIA) to collaborate with them and I’m glad that the NIA collaborated by giving them handset devices to enable them conduct on-the-spot checks to authenticate whether the motor insurance policies people are carrying are fake or not,” Daniel stated.
On the public building and buildings in course of erection, he observed that the law recognises the Federal Fire Service as having a significant role to play and also assigns to them a proportion of insurance premium generated by insurance companies, to enable them maintain their fire equipments. “So, we engaged them, that look, if you collaborate effectively on the implementation of compulsory insurances of public buildings,you will be able to make more money in such a way that you don’t need to rely on government budget to carry out your duties and they are keying into it.”
This August, there is going to be a conference of all fire services in Minna, and heads of all fire offices will be in that conference and NAICOM will sponsor it, Daniel disclosed.
“For pensions, it is not even my primary responsibility to ensure that people comply with group life but it is my business because a product of group life is insurance”. So, if a lot of Nigerian employers are taking group life for their workers, insurance will become bigger. And that is why we entered into strategic alliance with the Nigerian Labour Congress.”
When we sponsored their conference last year in Enugu, we told the Congress that this law has been made for the benefit of their people and that if an employer is not putting in place group life for workers, those employees are short changed. And we told them the benefits and they have the lists of companies employing them and they are checking for us.
“What we did is to pioneer that but ideally it is the National Pension Commission (PenCom), that should be driving it, but we are partners in progress, Daniel observed
“If you look at Section 9 of the NHIS Act, it provides that every medical service provider must have a Professional Negligence Cover, which means if a nurse injects somebody wrongfully and it causes paralysis, insurance will pay and that is if Professional Negligence Cover is instituted.
“So we had a meeting to see how we can make these hospitals comply and I think they provided the list to NIA to follow up. My duty is discharged as far as that is concerned.
According to Daniel, using these stakeholders “to achieve what we want to achieve will be more effective; it’s cheaper and faster and all the organisations we have approached are very, very enthusiastic, and they are working. “We think that with the revised strategy we should get a better result”.
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