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Over-regulations, barriers to micro-insurance, Irukwu

By Patience Saghana
Over-regulations in the insurance industry and regulations which overlap other sectors’ laws have all created barriers to the development and growth of micro-insurance in the country, according to Prof Joe Irukwu, Insurance Law Review Committee Chairman.

Prof Irukwu while delivering a paper on Micro Insurance: Tracing the Possibilities, Tracking the Problems, and Tapping the Potentials at the Stakeholders Interactive session in Abuja recently.

Irukwu who is an ardent believer in micro-insurance insurance said, “The over regulation of the industry in some jurisdictions constitute barriers to micro insurance, especially where it restricts foreign investment in the insurance industry, which makes it difficult to transfer know-how”.

Furthermore, he stated, “Overlapping regulations can create problems for micro insurance design and delivery. For example, different supervisors or regulators exercise some modicum of control over the same organization”

He legal luminary observed that some other regulations that need to be tackled has to do with encouraging agency in the sector would to a large extent boost micro-insurance in the industry.

He advised, “If we really desire to promote a viable micro insurance industry, we must remove those existing regulatory barriers to the effective distribution of micro insurance”

According to him’ “Other regulatory barriers that should be addressed include such matters as agency commission. The limitations on the commission offered to an agent may hinder the development of micro insurance, especially in the areas of life insurance and the need for the protection of the life funds from getting depleted, due to expensive distribution structures”.

Apart from motivating agency, he said that insurance companies should endeavour to tailor the products towards meeting the needs of low of the grassroots and low income earners especially on life products. “Some types of life insurance products for low-income earners and such products as endowment policies may not be suitable for micro insurance since it has a savings element which the low-income segments do not have due to their low earnings and difficult cash flow that leads to unduly high lapse ratios”.

He further advised, “A positive and flexible regulatory environment is necessary for the development of micro insurance. It would be reasonable to state that the basic legal framework exists that should allow for micro insurance to thrive in the country”

He however implore insurance operators to key into the numerous potentials that micro-insurance has top offer the sector and make good use of it.

Micro-insurance, he said affirmed, “has played and continues to play vital roles in the promotion of healthy and stable societies, even if it is not all types of micro insurance that play positive roles in the stabilisation of societal equilibrium”

“Such products as those covering assets, livestock, housing and credit linked insurances protect the economic interests of policy holders, whilst other products, such as life, health, old age pensions and disability insurances are tailored to grant covers which have the effect of providing a healthy and stable society in addition to protecting the health and general well being of the concerned lives”.

He noted that micro-insurance development has not only suffered as a result of regulations but that the environment in which insurance companies operate could also contribute to the under-development of lack of micro-insurance it.

“As we plan for the development of micro insurance as part of our expansion strategy for the Nigerian insurance industry, we must give some attention to a few of those serious environmental factors that pose major challenges to our efforts.  The most challenging of these factors include the environment itself, the lack of adequate statistical information for the realistic assessment of risks and for the calculation of premiums”.


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