By ROSEMARY ONUOHA

The Nigerian insurance sector has always been considered as the weaker sibling of the banking sector in the financial industry unlike in advanced climes where insurance companies own banks.

With the rebasing of the Gross Domestic Product, GDP, recently, the position of the insurance sector in the economy dipped further as the sector’s contribution to GDP dropped to 0.6 per cent from 0.7 per cent.

Where some operators believe that the true position of the insurance sector was not well captured, others are of the view that it is a challenge for the sector to up its ante.

Invariable, in the light of the disheartening ranking, a challenge has been thrown to insurance operators to realign their operations and services in order to achieve better performance, which will ultimately enhance the sector’s position in the financial scene going forward.

Commissioner for Insurance, Mr. Fola Daniel said that the recently rebased economy has challenged insurance companies to perform better, in term of claims settlement and products deliveries.
According to Daniel, to live up to expectation, there was the need for more dynamic strategies to enable insurance industry make meaningful contribution to the GDP.

Daniel said “The rebased economy should challenge underwriting companies to be on their toes going forward.”
However, operators on the other side of the divide are of the opinion that insurers’ inability to articulate and provide adequate data of their operations may be responsible for the drop in the sector’s contributions to the GDP.

The operators noted that the industry’s contributions were underestimated, adding that the industry has in recent times made significant progress.

Meanwhile, Daniel said that the National Insurance Commission, NAICOM, will consolidate on the gains made so far and ensure proper implementation of the compulsory insurance products to enhance the industry contribution to the GDP.

NAICOM, he said, incepted the Market Development and Restructuring Initiative (MDRI) in 2009, to enforce compulsory insurances and eradicate fake insurances in the country. The initiative, he added, has been vigorously pursued by the Commission across the six geo-political zones of the country.

“From 2008 to the end of 2012, the volume of premium written by the industry on the classes of compulsory insurance business increased by 92 per cent from N14 billion in 2009 to N28.68 billion in 2012,’ he stated.

Daniel equally noted that, the number of insurance policies written under the compulsory insurance by underwriting firms in the last three years also appreciated sharply by 111 per cent from 72,180 in 2009 to 152,181 at the end of 2012.

He maintained that the industry in the last three years has had some geometric projections, adding that, the market will achieve well over 100 per cent at the time the performance of 2013 is added to the figures available.

Though the Commission was unable to attain the N1trillion mark it planned to achieve through the MDRI in 2009, he said the performance so far shows that industry players are voluntarily meeting up to their obligation without the Commission getting involved, adding that they are also meeting up to their responsibility of claims payment.

He noted that the various state governments have continued to show interest in insurance business,  adding that a group of underwriters have come together to enforce the motor vehicle third party liability insurance in Imo state in collaboration with the state government and the scheme is working very well.

He said that another group of 19 underwriters are enforcing the Occupiers Liability Insurance in Enugu State, in partnership with the State Government. “The Commission is working to get more states to embrace these models,” Daniel said.

Aligning with the Commissioner for Insurance, some operators have stressed the need to go back to the drawing board to correct all abnormality by doing the needful. They called for proper documentation of the industry’s data, which will bring about proper valuation of the progress made in the sector.