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Why you need at least six insurance policies

By Ikeoye Oyetoro
National Insurance Commission (NAICOM) and insurance operators have embarked on an enlighten campaign to sensitise the public on the need to hold at least six insurance policies.

The campaign is part of industry efforts to deepen insurance penetration in the country and ensure all Nigerians enjoy the benefits of insurance cover as obtained in developed countries.

Though a statutory requirement, compliance with insurance obligations has been low due to malpractices especially by fake insurance agents.

To arrest this trend and deepen insurance penetration in the country, the  National Insurance Commission(NAICOM)  came up with Market Development and Reconstructuring Initiative. The trust of the initiative is the enforcement of the compulsory insurance products in Nigeria. The products are Builders Insurance Liability, Occupiers Liability Insurance, Group Life Insurance, Medical Professional Liability Insurance and Employers Liability Insurance.

Other components of the MDRI project are adoption of Risk-based Supervision and Solvency-focused Regulation by the insurance industry, bridging the skill-gaps in the young insurance practitioners and building consumers trust and confidence in the insurance mechanism.

It is also designed to  sanitise, modernise and expand the insurance agency system.

Other  objectives of this initiative includes helping people to manage risk, increase the contribution of insurance sector  to the nation’s Gross Domestic Product(GDP).

On efforts to implement the initiative, the Commissioner for Insurance, Mr Fola Daniel said the that the Commission and insurance companies have commenced sensitisation campaign of the public on the six insurance products.

He explained that the compulsory insurance products are mandatory by law and the purpose is to ensure that people are compensated in the case of motor accidents or collapse of building. He said due to non compliance, people have been denied the benefits of such compensation but the Commission would not allow this to persist and that is the trust of the  MDRI.

He said that the public needs to understand that insurance industry is there to  provide succor to the bereaved, protect national wealth and make employers and professionals to be alive in their responsibilities to fellow citizens.

Daniel added objective of the sensitization campaign is to enlighten the public on the benefits of complying with the compulsory insurance products and  sanctions for non compliance. that the sanction for refusal to comply with  the insurance and the benefits to be derived by taking the insurance have been made the subject of the on-going road shows embarked upon by the insurance companies across the country since the beginning of the year.

“A formidable enforcement team made up of all stakeholders have  been put together and will for one month in each year carry out nation-wide inspection of the affected properties and organisation,” he said.

He added that the insurance agents will start to issue Compliance Demands Notes to  citizens and Corporate bodies in Nigeria as from January 2011.

The President of Chartered Insurance Institute of Nigeria(CIIN), Mr Sunny Adeda  called for the assistance of all law enforcement agencies in the country for the implementation of the scheme. He said every law promulgated is for the benefit of the people but no law can be obeyed except there is enforcement of strict compliance, that is why  all law enforcement agencies should assist in enforcing this law so that Nigeria can be like developed countries.

Daniel  affirmed that if compliance with the compulsory insurance products is rigorously enforced and insurance marketing is reformed while the approach to insurance regulation and supervision is made more effective, then the ideals implicit in the MDRI  initiative would be realized.

The Chairman Nigeria Insurers Association (NIA), Rev Ladipo Ajayi noted that presently, insurance contribution to the GDP is below one per cent but this will increase significantly, when insurance penetration deepens and that is why implementation of the MDRI is very important. He said in addition to this, increased patronage via compliance with the compulsory insurance would help enhance to capital of the industry.

Also the President, Association of Registered Insurance Agencies of Nigeria (ARIAN), Mr Kingsley Obuvie said the significance of insurance agents cannot be undermined saying they act as intermediaries between the insurance company and the customers.

Obivie said the agency system via ARIAN is determined to propel the repositioning of the insurance agents with a view to deepening, insurance penetration in Nigeria.

The ARIAN boss said its association intends to collaborate with NAICOM to ensure the success of the MDRI saying the cooperation of all stake holders will make the objectives of the project to be achieved.

In the same vein, the President, Nigerian Council of Registration Insurance Brokers, Dr Teslim Sanusi said every individual has the right to say what they want in democracy but they must obey the law.

He affirmed the commitment of the insurance brokers toward deepening insurance penetration at the grassroots and hence to the implementation of the compulsory insurance products.

On the significance of the six compulsory insurance policies, Consultant to NAICOM, Mr Yemi  Soladoye said these insurance policies are to provide protection to the general public against any risk.

He said Builders Liability Insurance, under Section 64 of the Insurance Act 2003, is for all owners and contractors of any building under construction that is more than two floors.

The purpose, he said  is to compensate the site workers or members of the public who may die, get injured or loose their properties as a result of construction risks and failure to comply with this law will attract a N250,000 fine plus two years imprisonment.

He said the Occupiers Liability Insurance, under Section 65 of the Insurance Act 2003 is compulsory for all landlord and tenants of all completed buildings in Nigeria except mosques and churches and the essence  is to compensate users, loggers and licensees, among others who may die or become disabled or loose their properties in case of damage by fire, storm, flood, earthquake or collapse of buildings and the sanction for non compliance is N100, 000 plus one year imprisonment .

He explained that the Group Life Insurance, under Section9(3) of the Pension Reform Act 2004, compensates the families of all government and private sector employees, who may die or disappear during the service and the penalty for non compliance is the personal prosecution of the negligent schedule officer.

Soladoye said the Medical Professional Liability Insurance , under Section 45 of the National Health Insurance Scheme Act 1999, is mandatory for all NHIS accredited hospitals to compensate the patients, who may die or become paralysed due to negligence of a medical personnel during the cause of treatment and non compliance warrants prosecution for involuntary murder and revocation of operating licences.

The Employers Liability, under the Workmen Compensation Act 1987(as amended), is to compensate those who may die or injured while working in factories as apprentices or as domestic employees and the fine for non compliance is as much as twice the amount that would have been paid as premium.

The NAICOM Consultant said the Motor Third Party Liability Insurance, under Section 68 of the Insurance Act 2003 is meant to compensate the road users, passengers, commuters and property owners who may die,  injured or have their properties damaged in the cause of motor accidents and the penalty for non compliance is N250,000 fine plus one year imprisonment.

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