Breaking News
Translate

NAICOM to sign MoU with states on compulsory insurance

By Favour Nnabugwu

The National Insurance Commission (NAICOM) has mapped out plans to sign memorandum of understanding with states government across the country for enforcement of compulsory insurance.

Commissioner for Insurance, Alhaji Mohammed Kari, at a meeting with staff of the Commission in Abuja recently, said the insurance industry need to think out of the box to ensure that the compulsory insurance is enforced across the country.

“The MoU that we will sign with the states will enable them earn income from the enforcement because we believe that if there is an income definitely they will be mobilised. And they keep talking about contributing to their Internally Generated Revenue (IGR) to enhance that; and the area of enforcement out of the states also differs.”

He added, “We have heard from the states because we believe we can only improve on penetration if we enforce compulsory insurances. The challenges being that our law is a federal law, it doesn’t apply in states and the states also have to pass some local laws that will enable us enforce.”

Compulsory insurances are those classes of insurance made compulsory by law, frequently with the objective of providing protection to third parties and the general public. There are five insurance products made compulsory by the insurance Act 2003 and other related legislations.

The Commission has the statutory power to enforce these products, namely Group life insurance in line with Pension Act 2014; Building under construction- section 64 of the Insurance Act 2003; Public building liability insurance – section 65 of the Insurance Act 2003; Motor Vehicle (Third party) Insurance Act 1945; Health Care professional Indemnity Insurance under section 45 of the NHIS Act 1999.

Kari is particularly worried that insurance penetration will continue to be low if the operators remain within comfort zones without expanding the business to the nooks and crannies of the country.  “The poor penetration of insurance in the country is no more a new statement or information. It is a position we all certainly cannot be proud of. What should be done in this ugly situation is the issue. Developing a robust insurance sector in any country requires developing a good strategy on insurance penetration”

He said, “While the newly formed insurers’ committee has set up various sub-committees to look at that and more issues, the commission is complementing those efforts by expanding its enforcement of compulsory insurances down to the states level.

“We also identified the limited channels of distribution as a major inhibition factor to penetration. In this regards, we have considered the creation of additional distribution channels and have gone far on the preliminary works and draft of guidelines which will soon be exposed for input”, he said

Apparently irked by the enormity of mal-practices in running the business in the states levels, the commission has expanded enforcement of compulsory insurances down to the state levels.

According to NAICOM boss, “Apart from the fact that the industry losses may run into billions of naira earned by fake operators, it is worrisome that the public who patronize this illegal arrangements supported by the state governments cannot make any claims in the event of accident on their insurances.”

Kari said “While the newly formed insurer’s committee has set up various sub-committees to look at the issue of penetration and other issues in the market, the commission is complementing those efforts by expanding the enforcement of compulsory insurances down to the state level. He also said that the Commission is in talks with the Federal Capital Territory (FCT), federal Fire Service and Vehicle Inspection Office (VIO), among others.

“Now we are also talking to development control in the FCT to enforce buildings under the course of erection, so if they will help us to enforce that one, they will not give permit for building structures until there is insurance or some promise to take up insurance and they can inspect any site and seal it for demolition if there is no insurance and they law state certain type of structures that should be insured.”

“The beauty of the fire service is that not only did they have the power of enforcement they have includes the power to seal a business premises, if you are not compliant they will seal you and you could imagine the boost it would give premium income in Nigeria.”

“Every public premises must be insured according to the law and public premises as defined include; schools, filling stations, offices, any place where public have access to. You can imagine if only the filling stations in Abuja alone will take up insurance they will some boost in the premium of insurance.”

On the state level, Naicom boss expatiated, “They explained to us that though the state fire services are independent of the federal fire services but they have an arrangement where they can coordinate activities for us and we agreed that both will have a joint committee.”

 

 

 

 

 

 


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.