By ROSEMARY ONUOHA
There are strong indications that insurers may jettison the enforcement of compulsory insurance products encapsulated in the Market Development and Restructuring Initiative, MDRI, being championed by the National Insurance Commission, NAICOM, due to what they termed ‘high cost of training agents.’

Of recent, NAICOM, has been going around the country trying to enforce five compulsory insurance products made mandatory by law, however, insurance operators who naturally should sell the products have shown little or no interest in that regard.

NAICOM, over two years ago picked on 5 out of the 15 compulsory insurance products in the country as flagship products which it is currently enforcing with the laws that made them compulsory.

These products include Occupiers’ Liability Insurance and Builder’s Liability Insurance both mandated by Sections 64 and 65 of the Insurance Act, 2003. Medical Professionals Liability Insurance, mandated by Act 35 of 1999 establishing the National Health Insurance Scheme (NHIS).

The others are Employers’ Liability Insurance, group life insurance for employees as mandated by the Pension Reform Act, 2004 and the Third Party Motor Insurance mandated by the Third Party Insurance Act, 1950.

Although, NAICOM has carried out enforcement exercises  in Ibadan, Ilorin as well as Enugu, insurance practitioners so far have ignored the exercises  and have failed to capitalise on it to increase their market share as well as deepen insurance penetration in the country.

The lack of interest on the part of operators, according to Vanguard investigations, is borne out of fear that Nigerians are not ready to embrace the compulsory insurance products, hence they could be throwing money down the drain by training agents that are not likely to make sales when they go out.

Chairman of Nigerian Insurers Association, NIA, and Managing Director of Lasaco Assurance Plc, Mr. Olusola Ladipo-Ajayi, said that companies have engaged agents to sell the compulsory insurance products but these agents left when they did not perform, as such companies will not continue to engage and train agents who will not bring in business at the end of the day.

He said, “Insurers have to train agents who have to go out and sell these products and we cannot pay them full salary like everybody. So when you train agents and you give them N30,000 for six months and they don’t do anything, they just fizzle out or they look for employment somewhere, and we can’t continue like that.”

Ladipo-Ajayi noted that one of the major challenges they are facing as regards the enforcement of compulsory insurance products is on the part of agents because they all want regular employment which insurance companies cannot afford.

“Some of us we have employed agents and thrown them out because nobody is buying.  But if there is no penalty, sanction, law enforcement, everybody always thinks nothing bad will happen. So these are the challenges we are having and we are running commercial enterprises and we cannot keep pumping money where there is no possibility of return.  Nobody sees an opportunity without embracing it. If there is so much opportunity we are going to embrace it.”

Managing Director of FBN Life Assurance Limited, Mr. Val Ojumah told Vanguard that the dependence on agents as the sole distribution channel of the compulsory insurance products is not the best of options since many companies are running away from training agents because it is highly capital intensive.

According to him, NAICOM may not get the level of buy-in into the MDRI from insurance companies as it envisaged because cashing in on the benefits of the compulsory insurances will require companies to engage the services of a large number of agents. And since agents don’t stay long in one company, companies are not ready to commit funds towards training them.

MDRI is a medium term plan under which NAICOM is carrying on the first phase of the reforms in the country’s insurance industry.  It is premised on four key areas namely; enforcement of compulsory insurance products, sanitisation and modernisation of the insurance agency system, wiping out of fake insurance institutions and introduction of risk-based supervision.