In 1999, the insurance industry lost health insurance, in 2004, the sector lost pension, recently it lost the control of workmen’s compensation. Thus the industry  lost three critical classes of insurance business within ten years.  Stakeholders however attribute these loses to divided interest among operators,  Rosemary Onuoha writes.

After a long drawn battle between the insurance industry and the Nigeria Social Insurance Trust Fund (NSITF), The Employees’ Compensation Act (ECA) replaced the Workmen’s Compensation Act (WCA) following the signing into law  the Employees Compensation Bill by  President Goodluck Jonathan signed into law, the management of workers compensation that has been under the control of the insurance industry was transferred to the care of NSITF.
The National Insurance Commission (Naicom) argued that workmen’s compensation should continue to be undertaken by the private sector as it is in accord with good judgment since no major government anywhere collects funds to be managed on behalf of the private sector, adding  that government responsibility begins and ends with  setting of standards by way of regulation while the people enjoy freedom to choose their insurers. NSITF however replied that there is no way the profit-driven private sector operators can deliver on social security, saying,  “All over the world including capitalist economies of America and Britain social security is being handled by government.”

The new Act
The Act provides for the establishment and maintenance of a solvent compensation fund managed in the interest of employees and employers. It sought to combine the efforts and resources of relevant stakeholders for the prevention of workplace disabilities as well as the enforcement of occupational safety and health standards.
The provisions of the new Employees’ Compensation Act which were passed by both Houses of the National Assembly, apply to all employers and employees in the public and private sectors of the Federal Republic of Nigeria.

The implementation of the Act and the management of the compensation fund established under section 56 of the Act are to be overseen by the Board of the Nigeria Social Insurance Trust Fund (NSITF).

The long drawn battle While the battle between NAICOM and NSITF lasted, the NSITF, which is entrusted with the delivery of social security to Nigerian workers under the Pension Reform Act, 2004 reaffirmed its commitment to the full implementation of the Act while NAICOM on the other hand, stated that it carried out a review of the entire insurance laws including the existing Workmen’s Compensation Act, and had repackaged same as a consolidating legislation in line with international best practices, adding “We are strongly of the view that a consolidated approach to insurance legislation would be better than the piece meal approach advocated by the Employee Compensation Bill,” said Fola Daniel, Commissioner For Insurance.

Mr. Umar Munir Abubakar, Managing Director of NSITF said  that the Workmen’s Compensation Act is obsolete having been enacted in 1948 and being implemented by insurance companies, adding “The WCA is totally obsolete and is no longer operational in the country but the Employee Compensation Act will usher in a social security scheme for workers in the country.”  But NAICOM in a statement said   that it was very much alive to its responsibility of enforcing the Workmen’s Compensation Act, however, her efforts have consistently been marred by the unjustifiable failure and /refusal by the Ministry of labour to make regulations relevant for enforcing the provisions of the Act.

“For more than 20 years now and for inexplicable reasons, the Ministry of Labour has failed to make the relevant regulations. The clear implication of this failure to make regulation is that while workmen’s compensation is compulsory by virtue of section 3 (1) of the Act, workmen’s compensation insurance is not compulsory, and therein lies the helplessness of the Commission. A clear solution to this problem is the making of the relevant regulations,” NAICOM stated.

Abubakar stressed that what is being proposed in the ECB is different from an insurance scheme saying, “Apart from providing compensation to workers, the scheme has in-built benefits which include a no-fault claim, rehabilitation and counseling of workers who get sick or involved in accidents in the workplace, on the way to and from work and any other place in the course of discharging his work. This makes up the scheme being proposed by government and NSITF and no insurance company can deliver on this because the person at fault in any case of industrial accident is a major determinant of whether an insurance company will pay the claims or not under workmen’s compensation”, he added.

“Insurance is a profit-driven industry and the operators in the sector are more interested in making profit. Social security is not for profit making and as such they are not interested in it.  But we are assuring them that we will work hand in hand with them to ensure the successful implementation of the scheme in the country.”  Abubakar stated.

The Nigeria Insurers Association (NIA) on its part argued that the NSITF was not able to manage the Nigeria Provident Fund entrusted to its care; as such there is the likelihood that funds committed to workers compensation might go the way of the provident fund.

NSITF countered with the argument that the insurance industry is awash with accusations of non payment of claims from the insuring public and the negative perception that the development has created for the insurance industry has become general knowledge.

Abubakar recalled that having taken away management of workers’ retirement benefit from the NSITF, the Pension Reform Act, 2004 empowered it as the only social security provider in the country. According to him, the responsibility was not misplaced given the fund’s 50 years experience in the management of retirement benefits and dealing with workers in all the nooks and crannies of the country.

What went wrong?

Mr. Yemi Soladoye, an industry expert and a consultant for NAICOM said the insurance industry lost the control of workers compensation because there is no unity of purpose amongst insurance operators.

In his words “Everybody in the insurance industry is looking at the small picture, consequently, in 1999 we lost health insurance, in 2004 we lost pension, and  in 2010 we ended up losing workmen’s compensation again meaning that we  have lost the third class of insurance within ten years.”

Soladoye reiterated that most industry operators are fringe players, stating “When we use the word fringe player in business terms, it means any company that is not mobilizing more than 2.5 percent of his industry turnover.  In the area of human capital development or capacity, I want to say that today, most managers who occupy decision making levels in our business lack the managerial capability for a diverse discipline like insurance.”