By Cynthia Alo

There is divergent view between the National Insurance Commission (NAICOM) and insurance operators on how to deepen insurance penetration in Nigeria.

Insurance penetration is measured as a percentage of premiums to Gross Domestic Product (GDP). Insurance penetration in Nigeria is estimated to be about 0.7 percent, far below the three percent for Africa.

Citing the example of other countries, insurance operators averred that it is enforcement that drives insurance penetration. NAICOM however said what is needed to drive penetration in Nigeria is collaboration between operators and the regulator.

Speaking at a seminar in Kano State, the Director, Governance, Enforcement and Compliance, NAICOM, Mr. Leo Akah, cited lack of collaboration as a major challenge to implementing  compulsory insurances in Nigeria.

He added that implementing compulsory insurances in Nigeria has been a challenge.

Akah stated: “For more than ten years running, the commission has been doing so much. At a point, even the operators were accusing the commission; they questioned the commission on their plan to achieve N1 trillion premium, which shows that they do not know their role.

“We do not write insurance policies, we don’t issue policies, our own is to break ground for them, make the environment very good for them,” he said.

To this end, Akah said that the solution to achieving compulsory insurance is collaboration by all stakeholders, saying: “There is only one solution when it comes to achieving the implementation of compulsory insurance, one solution that I recommend anytime is collaboration.

“There are some of these compulsory insurances that if the right parties such as institutions and government agencies begin to understand their respective roles, we will achieve more, because the compulsory insurances are products of other laws, such as Group life and others.

“Marine Insurance which is compulsory insurance used to be one of the vibrant of the others, why are we not making money from marine insurance today? So, I believe that collaboration with the relevant government agencies is key.”

Also speaking in this regard, President, Chartered Insurance Institute of Nigeria, CIIN, Mr. Eddie Efekoha, said that until people begin to show evidence of insurance whenever they seek something from government, underwriting business would not attain the desired heights.

The CIIN boss in an interview with Vanguard urged the government to support the insurance industry, through the implementation of insurance compliance certificate.

Efekoha said there is a need for force and compulsion to drive sales of insurance in the country adding, “The laws have not enabled us to enforce the compulsory insurances. This has handicapped all of us from taking the bull by the horns. Enforcement of compulsory insurances remained a gap we are yet to unravel.”

On his part, Group Managing Director of Royal Exchange Plc, Mr. Olawale Banmore, said that insurance penetration in other countries is significantly at a high level and this can be traced to the level of enforcement.

Banmore, bared his mind during an interview at the company’s office in Lagos, calling on government and the National Insurance Commission to strive towards increasing insurance penetration in Nigeria.

He said: “The market development initiative by NAICOM is quite interesting but over the years and in the course of travelling to some countries especially to other African countries, I realised that NAICOM should bother themselves more on enforcement of insurance.

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“For instance, when I went for a conference in November at Botswana, in the course of my discussion with a group, I realised Botswana has a population of N2.1 million people and they have savings life insurance companies and I asked how they measure up with such premium, they are making, they noted it could be traced to the level of enforcement.

He explained: “For example, in Botswana, you can’t ride a car without a form of life insurance. You know why! It is because the government is concerned with if you have an accident and die they don’t want that poor woman and children that you will leave behind to suffer. I was shocked. You can’t see a car owner in Botswana without life insurance.

“Over there, if you are working in a company before they give you a vehicle, you must show a form of group life insurance, if you don’t have, you must buy and this made me shocked. In this case, they do not need marketers because of the level of enforcement.

“There are other African countries, which are also ahead of us. They will always be ahead of us in terms of penetration because they have enforcement. Enforcement is not arresting you but to put in place something that will curb you and force you to buy insurance,” he said.

According to him, the insurance industry should emulate the PenCom industry in terms of enforcement saying, Look at the initiative of PenCom this year. They have said that they won’t issue clearance to all those companies until they have life insurance for their companies. Which is very good but only if they can enforce it. Life insurance is a huge business. I know you can say that the purchasing power in Nigeria is low, people don’t have money but they have money to acquire assets and throw parties but won’t buy insurance?

He stated that motor insurance is an area insurers should tap into but only if more Nigerians could comply with the policy.

On the way forward, Banmore called on NAICOM to sensitise all the agencies that can enforce insurance policies for us, saying that the earlier the better.

In an interview with Vanguard, an insurance consultant, Mr. Ekerete Gam-Ikon, said, “We have to stop being egoistic about the future of the insurance industry in Nigeria and show readiness to learn from others especially those succeeding where we are not even though that our problems are not the same.

According to him, “We have a higher capital base, laws and guidelines that have established health insurance, microinsurance, and Takaful which other countries are just trying to put in place; those countries like Ghana came to learn from us and are getting better. We should be asking, why and have the answers guide us,” he stressed.

However, the Consultant he said that the major hitch to the growth of the insurance sector include a lack of trust and the level of digital penetration.

“The larger populations still do not believe claims will be paid even when they see products that suit their lifestyle. Also, investment in digital solutions is slow, so it will take another decade for the insurance in Nigeria to add one percent to its penetration rate,” he said.

Vanguard