The absence of a strong legislative framework is one of the factors militating against the adoption of global best practices in the insurance industry, writes Ebere Nwoji
In the words of the immediate past Commissioner for Insurance, Mr. Fola Daniel: “By its nature, role and position, insurance, is a veritable driver of every economy and no country can make significant progress in the field of economic development unless it has a virile , strong, trusted insurance industry to drive it”. For a country like Nigeria to build insurance sector with the above qualities, a strong and effective legislative framework needs to be put in place.
Most advanced economies of the world have vibrant insurance sector shaped by insurance laws that satisfied international best practices. Thus, for Nigeria’s sustainable economic development, viable insurance sector, guided by comprehensive laws that can stand test of time is an indispensable prerequisite. But be that as it may, Nigeria’s insurance sector is still undergoing reshaping processes in order to activate it to play the expected roles in economic transformation of the country.
For many years now, the sector had been operating under diverse but weak legal framework. Thus, at various times, beginning with the Insurance Companies Act of 1961, which was the first legislation for the insurance industry in Nigeria, the nation has various insurance act such as Insurance Act 2003, Insurance Act 2004, Insurance Act 2007, Nigeria Insurance Act 2013, among others. But following the deficiencies in the various legislations, the enforcements also witnessed haphazard implementation. The consequences had been influx of fraudulent and quack practitioners masquerading as insurers at the expense of unsuspecting public and economic growth of the nation.
Indeed, the public has been left at the mercy of fake and fraudulent operators who parade fake insurance certificates thereby constituting leakages to the system.
The worst hit among insurance policies faked by these dubious operators is the Third Party Motor insurance and other similar compulsory insurances.
Even among genuine and professional insurers, existence of weak legislative frame work often give them loop hole to misbehave to the detriment of the insuring public and the industry’s image.
Against this backdrop, the industry regulator, National Insurance Commission and other similar regulators of the industry including the operators have been calling for a stronger legislation that will strengthen the industry and enthrone the regime of global best practices.
The last attempt at coming up with comprehensive legal provisions regulating the insurance sector was that of the renowned insurance guru, Professor Joe Irukwu led committee on review of insurance laws. The committee was constituted by the then Minister of Finance, Shamsudeen Usman over 10 years ago with the mandate to identify the factors that hinder insurance growth in Nigeria, among other issues. And one of the major factors the committee noted was the prevailing poor legal framework.
At the end, the committee came up with what could be regarded as the first ever comprehensive document on issues affecting the sector. However, it suffered a major set back by the inability of the then National Assembly to concretise the efforts by passing it into an enabling Act the proposed Insurance (Consolidated) Bill, which emanated from the review process.
The proposed Bill provided basic principles, intended to promote timely and proactive intervention to protect policy holders and stakeholders; promote discipline, ethical practices and sound market conduct; enhance insurance penetration, awareness and growth; and promote employment generation.
Having also observed the importance of a vibrant insurance sector in stimulating and sustaining socio-economic development, the Minister of Finance, Mrs. Kemi Adeosun, last week, renewed bid to a concrete and reliable legislation for the insurance sector. Towards realising this objective, she inaugurated a new committee for the review of Insurance (Consolidated) Bill. The committee headed by a renowned expert in Insurance Law, Dr. Omogbai-Omo Eboh, had the Head of Legal Department of National Insurance Commission, Dr. Talmiz Usman, as Secretary.
Other members of the committee include the representatives of ministry of finance, National Insurance Commission, Nigeria Insurers’ Association, Nigeria Council of Registered Insurance Brokers, Institute of Loss Adjusters of Nigeria, the Attorney General of the Federation, Kamar Raji and Dr. Ladi Hamalai of the National Institute of Legislative Studies. This assignment is tantamount to rescue mission for the soul of insurance sector in Nigeria.
Speaking at the inauguration of the committee at the Corporate Headquarters of the ministry of finance, the Minister emphasised that insurance is a very strategic tool towards developing the nation’s economy, which she said President Muhammadu Buhari’s administration was committed to actualising. Adeosun noted that there can be no developed economy without a vibrant insurance sector that is well positioned to play its expected complementary role. She expressed the need for the committee to expedite action on the assignment, saying that even though they had been given a time frame of 90 days to submit their report, it would be more appreciated if they could finish within a month or two ahead of the scheduled time. She noted that the review was long overdue and consequently, there was no time to waste.
The committee’s terms of reference include to: critically review the Draft Insurance (Consolidated) Bill with a view to ensuring it meets all the basic tenants of Framework Law or principle-based legislation; make a comparative review of the Draft Insurance (Consolidated) Bill to align it with the power of other financial services regulators in Nigeria; examine current market problems and recommend appropriate regulatory powers to allow the insurance regulator act appropriately; review all other insurance related laws and update the Draft Bill to align with international best practice; and to make such other recommendations as they may deem necessary for the overall good of the insurance industry.
Further, she mandated the committee to “endeavour to identify other Nigerian Laws that conflict or compliment the activities of the insurance sector with a view to advising government of the need to either merge, consolidate or repeal so as to have a seamless functional regulation for the sector.” This is just as she solicited supports of the stakeholders to assist the committee realise the targeted goal saying, “I call on all, especially the Nigerian Insurance Industry to take this opportunity to fully cooperate with the committee to come up with a draft that would be the impetus for rapid growth not only for their sector but for the nation and in particular all consumers of insurance services alike.”
Also speaking at the event, the Chairman of the Committee, Eboh assured that the members of the committee would bring to bear their various experiences to ensure that the objective of the review work was realised.
He said: “Accept my most sincere gratitude and appreciation for the confidence reposed not only on me but also on the committee. And I wish to state that we will bring our best efforts and expertise to bear on this assignment. We understand the time frame that you have given and we are prepared to work assiduously and conscientiously to meet the expectations within that time frame.”
Eboh further noted that as the government is committed to developing the economy, the insurance industry must play a leading role in that direction. He concludes that a virile, strong and purposeful insurance industry is the backbone of any economy, adding that this is more pertinent given that the nation’s economy is the largest in Africa. And to realise the expected result, he said that in course of the committee’s assignment, at least two public fora would be organised to generate inputs not just from the stakeholders but from the ultimate insurance umbrella. He explained that the ideas and information generated would assist the committee to come up with a draft bill that would stand the test of time.
On his part, the Commissioner for Insurance, Mohammed Kari thanked the Minister for considering it expedient to reposition the insurance sector and promised that the National Insurance Commission (NAICOM) would provide all necessary assistance to the committee to carry out its assignment. Given the enthusiasm expressed in this second round of review of various laws existing within the insurance sector, expectations are high that the National Assembly would not abort the realisation of consolidated insurance Act for the country.
Also from the operators’ side, there are plans to ensure that the proposed act this time is a dream realised.
Recently, the president of Nigerian Council of Registered Insurance Brokers (NCRB) Kayode Okunore disclosed that for the purpose of having a stronger legislation that will address all the problems of the industry, the Nigeria Insurers Asscation (NIA) and NCRIB have formed a strong alliance by setting up a committee that would review the act when the attention of the industry operators is called upon by the federal government review committee.
He said the committee will ensure that this time, the issue of right legislation for the industry is addressed.