‘NAICOM should restrict compulsory insurance where supervision is possible’

on   /   in Insurance and You 12:20 am   /   Comments

By ROSEMARY ONUOHA

IF the National Insurance Commission, NAICOM, hopes to achieve success in the implementation of compulsory insurance products, it should be restricted to areas where a need is generally felt and in sectors where supervision is possible at a reasonable cost, Managing Director of Niger Insurance Plc, Mr. Kola Adedeji, has said.

According to Adedeji, not much has been achieved in the implementation or enforcement of the law on compulsory insurance of public buildings, despite all efforts by NAICOM so far.

It will be recalled that the Insurance Act 2003 made provisions for a number of compulsory insurances amongst which is the insurance of public buildings. Section 65 of the said Act provides thus: “Every public building shall be insured with a registered insurer against the hazards of collapse, fire, earthquake, storm and flood”

Public buildings

The Act defines public buildings as tenement houses, hostels, building occupied by a tenant, lodger or licensee, building where the public have ingress and aggress for the purpose of obtaining educational or medical services or recreation or transaction of business. This would include eateries, restaurants, internet cafes, shopping malls etc.

Punishment for non-compliance with this provision is stated as either a fine of N100,000 and/or imprisonment  for  one year.

However, Adedeji noted that this provision should provide a lot of benefits to Nigerians taking into cognisance the incessant collapse of buildings nationwide, especially in Lagos State.

“Nevertheless, it is important to stress that problems associated with the insurance of public buildings cannot be divorced from the general problems of the Nigerian insurance industry, though some peculiar challenges are identified,” Adedeji said.

He identified challenges confronting the law to include ineffective legal framework, poor compliance culture, lack of awareness on the part of the public, and ineffective implementation of strategy adopted by NAICOM.

On ineffective legislative framework, Adedeji said that generally, the legislative framework for insurance practice in Nigeria is inadequate and ineffective.

“Often times, we find the law making unenforceable provisions, which, though good on paper, is almost impracticable without strong enforcement provisions,” he said.

On ineffective implementation strategy by NAICOM, Adedeji said that it may have been more beneficial to use persuasive approach through the registered associations of businesses which the law listed as requiring insurance of public buildings.

According to him, the practice of compulsory property insurance or insurance of public building is not wide spread in the world, so it is innovative and therefore, may require innovative steps in order to accomplish its objectives.

Adedeji said that it is a very important aspect of insurance business that holds so much opportunity for the industry, but is being affected by systemic issues that need to be resolved if all are to benefit.

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