Insurance regulator, the National Insurance Commission (NAICOM) has disclosed plans towards ensuring that Federal Government budget appropriation for insurance was spent on purchase of insurance.
Mohammed Kari, commissioner for Insurance who disclosed this at the sideline of the 2015 Insurance Professional Forum held in Abeokuta said out of the N20 billion appropriated for insurance in 2014 outside the group life insurance, only 10 percent was actually spent on insurance.
Going forward, this will have to change as the present day government is committed to transparency and rule of law, Kari said.
According to him, with the coming up of two refineries in the country, new investments in power sector as well as coming back of Nigeria Air carrier before the end of first quarter of next year, there is no doubt that a lot of opportunities will come for insurance.
Government is the biggest spender on insurance, resulting to why there is a lot of dependence on public sector accounts estimated to be over 50 percent of the total industry premium.
In most part of last year, government both at the Federal and State focused largely on electioneering campaigns to the detriment of other sectors of the economy, including insurance.
And with the enforcement of the policy on “No Premium No Cover” in the industry, it was not possible for government to secure covers on credit, so resulted to self insurance. The implication of this development is that millions of Nigerian employees in the public sector and quantum of government insurable assets spread across the country were under high risk exposure since there was no insurance.
Analysts who described the situation as dangerous for the economy said self insurance would never have been the best option when government needs a lot of money to provide infrastructure and other social services lacking in the country.
Obasi Ngwuta, executive director, West African Business School said it would be a misplaced priority for government to do self insurance when there are professionals to do it.
“It is illegal and pure violation of the law, because the Pension Reform Act 2004 that provides for group life insurance for employees and the Insurance Act 2003 that provides for compulsory insurance are laws made by government.”
“Don’t forget also that premium on risk is only a small fraction of claim, let alone when a big loss occurs, so it does not make sense that government should saddle itself with the responsibility of insurance companies.” Let them pay their premium, Ngwuta stated.
The right thing for government to do is to try and comply with the policy and take insurance seriously as they take other sectors of the economy, Ngwuta advised.