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INSURANCE IN 2018: Operators list pressure points

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By Rosemary Onuoha

AS the insurance year 2018 comes to an end today, industry operators have shared with Insurance Vanguard what they considered the main challenges of the sector during the year.

Insurance

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They had noted that the year started on a dull note due to late passage of the appropriation bill which meant that public sector business, the main driver of the sector, was placed on hold in the first quarter. This came at the backdrop of a tough stance of the sector regulatory authorities on the policy of no premium, no cover.

However, when the bill was eventually passed, many Ministries, Departments and Agencies, MDAs, of government refused to renew their insurances, thus undermining general performance of the sector.

Commenting on this, President of the Chartered Insurance Institute of Nigeria, Mr. Eddie Efekoha, said, “When the public sector is not working, nothing is working. That is the challenge we have. Some of us who have huge budget in the public sector, this year is one that failed because we really did not do much.”

Meanwhile, as part of efforts to curb rate cutting, the National Insurance Commission, NAICOM, in the course of the year released premium rates for compulsory classes of insurance products. Contrary to operators expectation for an increase, the Commission retained N5,000 as premium for Third Party motor insurance.

Rebranding campaign

Also in the course of the year, the insurance industry kicked off its re-branding project with focus on individuals rather than corporate entities. The Insurers Committee which championed the project, said that the middle class, lower class and individual citizens of Nigeria need insurance more than corporate entities that are currently major buyers of insurance products and services.

Vice Chairman of the Publicity Sub-Committee, Mrs. Ebelechukwu Nwachukwu, said the project will be carried out in phases with the first phase lasting for three years while N300 million would be expended on the rebranding campaign.

She had stated: “Through this project, the industry wants to capture individuals by first of all making them know the benefits of insurance. Insurance penetration is still low in Nigeria because most Nigerians don’t know the benefits. The industry has conducted extensive research into the project before embarking on it and the project is expected to transform insurance operation in the country.”

However, observers are of the opinion that the effects of the rebranding project are yet to be felt by Nigerians.

Regulations abolished

The other challenging development in the industry, according to the operators was the introduction of the controversial Tier Based Minimum Solvency Capital, TBMSC, which categorized insurers into three tiers according to their capital.

NAICOM had, in August, announced October 1, 2018, as commencement date for the TBMSC against January 1, 2019 it earlier announced. NAICOM had maintained that only companies that meet the respective tier requirements shall lead on new businesses in those categories with effect from October 1, 2018.

However, some shareholders, led by Sir Sunny Nwosu and seven others filed a suit against NAICOM in the Federal High Court, and the policy was subsequently withdrawn. NAICOM also introduced the State Insurance Producers, SIP, within the year.

A SIP is a state government agency licensed by NAICOM to provide intermediary insurance services in a particular state. Sadly, insurance brokers, under the aegis of the Nigerian Council of Registered Insurance Brokers, NCRIB, took NAICOM to court over the SIP claiming that NAICOM has no right to register state intermediaries and that the brokers are the only legal intermediaries. Once again, NAICOM cancelled the SIP just like the TBMSC.

While explaining reasons for introduction of SIP, Deputy Commissioner for Insurance, Technical, NAICOM, Mr. Sunday Thomas, stated: “We tried to engage the governors’ forum at a point to deepen insurance penetration. While we are yet to reach out to them as a group, we have reached out to some individuals within the forum, and the question they asked us when we asked them to enforce the compulsory insurance was, what exactly will be the benefits to my state? Some will tell you that, ‘in my state there is no insurance company, so, you want me to enforce and bring somebody from another state to come and reap what I am using my resources to create? We said, ok what can we do? We will create some level of revenue for you and possible employment. And that was the idea behind the issuance of the SID guideline.

“In the SIP guideline, we hope to establish an agency that will enforce and follow up with compulsory covers.  Off course people will be engaged to do this, and the underwriters that will take the businesses will be made to compensate them for getting those businesses. I believe that the compensation will be enough to underwrite whatever expenses that the state will undertake in the enforcement process.  And in situations where the Commission may subsidize or issue grants to states in the process of enforcements, the Commission will not stop at doing that if it becomes necessary. Because we have one agenda and the agenda is that the industry must assume its rightful place as provided by the available resources that we have in this country.”

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