Determined to bring the benefits of insurance to the nooks and crannies of Nigeria, the National Insurance Commission (NAICOM) has expanded enforcement of compulsory insurance to all the states in the country.
Apparently worried by the concentration of insurance business in major cities, the Commissioner for Insurance, Mohammed Kari, told the chief executive officers retreat of the Nigerian Council of Registered Insurance Brokers (NCRIB) in Osun State, that it was a matter of regret that penetration would continue to be low if everyone would only operate from the comfort of the metropolis or chase only existing clients with insurance policies without expanding the business to the nooks and crannies of the country.
He told the brokers “the task of market development is everybody’s, however, it is the trend to quiz the regulator why market penetration is low. Penetration would continue to be low if everyone would only operate from the comfort zone of the metropolis or chase only existing clients with insurance policies.
“The poor penetration of insurance in the country is no more a new statement or information. It is a position we all certainly cannot be proud of. What should be done in this ugly situation is the issue. Developing a robust insurance sector in any country requires developing a good strategy on insurance penetration”
He said, “while the newly formed insurers’ committee has set up various sub-committees to look at that and more issues, the commission is complementing those efforts by expanding its enforcement of compulsory insurances down to the states level.
“We also identified the limited channels of distribution as a major inhibition factor to penetration. In this regards, we have considered the creation of additional distribution channels and have gone far on the preliminary works and draft of guidelines which will soon be exposed for input”, he said
Compulsory insurances are those classes of insurance made compulsory by law, frequently with the objective of providing protection to third parties and the general public. There are five insurance products made compulsory by the insurance Act 2003 and other related legislations. The commission has the statutory power to enforce these products, namely Group life insurance in line with Pension Act 2014; Building under construction- section 64 of the Insurance Act 2003; Public building liability insurance – section 65 of the Insurance Act 2003; Motor Vehicle (Third party) Insurance Act 1945; Health Care professional Indemnity Insurance under section 45 of the NHIS Act 1999.
Meanwhile, the National Insurance Commission (NAICOM) has intensified regulatory enforcement and surveillance of underwriting and brokerage firms to flush out unregistered firms operating particularly in the states.
Apparently irked by the enormity of mal-practices in running the business in the states levels, the commission has expanded enforcement of compulsory insurances down to he state levels. During the surveillance, the commission found all sorts of under the table arrangements where insurance policies are being offered in conjunction with various state governments to unsuspecting public.
A source at the commission told The Guardian that fractions identified by the commission being committed by brokers in the states include receiving commission in excess of the maximum prescribed by law and leading a consortium of brokers that are allowed to operate in the state consisting of unregistered brokers and facilitating compulsory deduction of fees from the underwriter’s premium for gratification.
According to NAICOM boss, apart from the fact that the industry losses may run into billions of naira earned by fake operators, it is worrisome that the public who patronize this illegal arrangements supported by the state governments cannot make any claims in the event of accident on their insurances.
Kari said “While the newly formed insurer’s committee has set up various sub-committees to look at the issue of penetration and other issues in the market, the commission is complementing those efforts by expanding the enforcement of compulsory insurances down to the state level.