Continues from last week

Some of these militating factors would include – drastically low per capital income, unemployment & high incidence of job losses, poor and or dwindling economic environment and activities; poor pay and reward system within the Nigerian landscape including failure or ignorance of insurance buyers to appreciate the essence of premium payment and the implications of non-payment under an insurance contract among several other factors.

Above all, most people are yet to fully embrace the values of insurance, hence the few that are buying insurance are either compelled under a contract or statutory requirement.

4. WHAT PROMPTED NAICOM TO COME UP WITH “NO PREMIUM NO COVER” POLICY?

For the avoidance of any misconception, it must be made clear that NAICOM –   the insurance industry regulator is not just introducing the ‘No Premium No Cover’ regulation. Rather, NAICOM has been enforcing more than ever before compliance with this provision that has been in the insurance Act and its Regulations that were meant to guide the operators and their operations in the Nigeria Insurance Industry for the benefit of all stakeholders i.e. the insurance buying public, investors in the sector, and the Nigerian economy at large.

The need for NAICOM embarking on the stringent enforcement of the “No Premium No Cover” – a statutory provision in the insurance Act at this time, can also be better appreciated when the adverse effects of non-compliance over the years are reflected upon in the following areas:

The unimaginable magnitude of debtors and receivables in the balance sheets of insurance firms that have eroded assets values over the years, and that have consequently affected adversely their solvency, contribution to GDP, ability to meet claim obligations under contracts, and satisfying the investors yearnings for returns on their investments.

5. WHAT IS NO PREMIUM NO COVER?

The meaning and interpretation of No Premium No Cover as it applies to all stakeholders operating in the insurance industry is simply to forbid or render the granting of cover or issuance of any insurance policy or contract documents by insurance firms invalid except where premium has been paid by the insured or collected by the broker handling the transaction.

In cases where brokers are involved, the regulation allows the broker access to policy documents from the insurers on the issuance and delivery of a Credit Note for the premium already collected but awaiting remittance to the insurers within a period of 30 days. A breach of the above regulation in any form will attract a penalty ranging from imposition of fines to revocation of operating license of the offending insurance firm or broker.

6. HOW CAN THE POLICY BENEFIT THE INSURANCE CONSUMER?

The consumer stands to benefit tremendously from compliance with the regulation by all stakeholders, as obligations or policy benefits under insurance contract can be accessed in good time without any undue delay, while benefits payable can be a lot more generous and satisfying. And to a large extent, the trust and confidence of insurance consumers will be strengthened.

7. WHY INSURANCE CONSUMERS SHOULD COMPLY WITH THE POLICY.

Insurance consumers should strive to comply with the regulation to enable them enjoy and sustain the benefits (earlier advanced above) inherent in its compliance.

By its compliance, consumers will have unlimited access to investing in the sector at the stock exchange as the value of their stocks are bound to appreciate while returns (i.e dividends) will equally grow. Also the consequent growth in the sector and its gains will be to the advantage of all consumers as this will not only facilitate but enhance overall economic growth of the Nation.

8. THE GENERAL BENEFIT OF THE REGULATION ON THE INSURANCE INDUSTRY.

No doubt, compliance with the regulation by all operators is bound to yield good dividends, some of which include:

–                   Building and sustaining a more viable and robust insurance sector that can rank and effectively compete with counterparts globally.

–                   Insurers in particular can present better and attractive balance sheets with strong reserves to meet commitments and obligations

–                   The insurance sector will be better placed and empowered to secure their rightful ranking and recognition within the Nigerian economy in terms of contribution to GDP, Employment opportunities, investment outlets and investible fund channels.