NAICOM urges MDAs to settle debts with insurance firms

on   /   in Finance 12:00 am   /   Comments

Commissioner for Insurance, National Insurance Commission (NAICOM), Mr Fola Daniel, has appealed to government agencies to settle unpaid premium to insurance companies.

Declaring open a one-day workshop on the implementation of “No premium, No cover” policy, Daniel said delayed and unpaid insurance premium are  driving the industry into “extinction.”

He said “The vexed issue of delayed or unpaid insurance premium has now attained an alarming crescendo, threatening to drive the industry into extinction if not curbed. Most insurance companies make huge provisions for outstanding premiums in their books on an annual basis, which invariably affects their bottom line and their inability to make profit, pay dividends and attract investment to enable growth.”

The Commissioner identified government Ministries, Department and Agencies (MDAs) as the “biggest debtors” of insurance companies. Although he did not provide the amount owed by the MDAs, he alleged that many government agencies, with budgetary provision for insurance, delay payments of premium to insurance companies for months.

He added that in some cases the fund was re-deployed to meet other needs of the MDAs, which is in clear breach of the Insurance Act 2003. Daniel also stressed the need for MDAs to make adequate provisions in their budget for insurance of strategic government assets and property.

He told participants at the workshop, mainly insurance desk officers in government establishments, that the policy of “No premium, No cover” was not a creation of the Commission. “It is indeed a statutory provision in the Insurance Act of 2003 which is obligatory on NAICOM to ensure its implementation.”

He said desk officers would be culpable if they failed to draw the attention of their respective organisations on the need to ensure adequate insurance protection for strategic government assets.

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