Compulsory insurance policies are well established in the country’s statutory laws, but a few take them seriously. NIKE POPOOLA reports on the new approaches to change the situation

The National Insurance Commission has developed about five major compulsory insurance policies in the country’s statutory laws, using the Market Development and Restructuring Initiative.

They include: motor vehicle third party insurance, builders liability insurance, statutory group life insurance, occupiers liability insurance, and health care professional indemnity insurance.

After the inauguration of the policies in some states, NAICOM commenced the enforcement of compulsory insurance in November, 2011.

So far, the exercise has been successfully carried out in Ibadan , Oyo State and Ilorin, Kwara State.

The commission has been working with the enforcement team comprising the Nigeria Police, Federal Road Safety Corps, Federal Fire Service, among others.

The Consultant, National Insurance Commission, Mr. Yemi Soladoye, said that the market restructuring initiative was a project of NAICOM geared towards the development of insurance in this country.

He said, “MDRI is a process of presenting the Nigerian insurance market to Nigerians and engineering the cost of the market to a leadership position in Africa.”

According to him, the objectives include increasing the industry’s gross premium from N164.5bn in 2008 to N1.1tn by 2012; creating about 250,000 new jobs in the insurance industry; building consumer trust and confidence in the sector and lowering the insurance gap from 94.0 per cent to about 70 per cent.

Soladoye also said that it was aimed at attaining an increase in insurance contribution to Gross Domestic Product from the 0.72 per cent to over 3.0 per cent.

It also sought to increase insurance premium per capital from the current N1,200 to N7,500 by 2012.

Others, he added, were to increase the relevance of insurance as a tool of stimulating growth of other sectors of the economy; and to raise funds for project of national development.

The Group Managing Director, Mutual Benefits Assurance Plc, Mr. Akin Ogunbiyi, emphasised a more collaborative approach to the enforcement of the policies.

He said that there were about 450 registered insurance brokers in Nigeria, quoting the NAICOM’s statistics.

He observed that 80 per cent of the insurance market was being controlled by just about 15 of the brokers.

The insurer said that the brokers could explore the opportunities in the neighborhood because there were lots that they could be done in maximising the opportunities in the compulsory insurance policies.

Ogunbiyi said that there were about 22m family units in Nigeria, with Lagos alone having close to 250,000 housing units.

He stressed that the law provided that every house must have insurance certificates, adding that getting the landlords associations’ cooperation would do a lot in boosting the income of the industry.

“Our people should wake up if we want to get to the trillion naira income; government has given us the opportunity to do the right thing, and it is not what a single company can do, all of us should come together,” he said.

He also suggested a situation where all the operators could have a unified policy for the compulsory insurance policies.

He urged the Nigerian Insurers Association to come out with a comprehensive list of all registered insurance companies, and stressed the need to agree on the share of the compulsory insurance policies for each firm as well as a single platform for the underwriting.

This, he explained, would help to avoid the situation where fake insurance certificates would be issued.

The President, Nigerian Council of Registered Insurance Brokers, Mrs. Laide Osijo, said that with the MDRI, the industry was now better positioned to contribute more significantly to the nation’s Gross Domestic Product. 

The implementation of compulsory insurance, she added, would give risk protection to the nation’s individual and national assets and yield more dividends for the industry.

She also said that the active involvement of all the insurance bodies in the initiative would give it the platform to excel.

For a more effective enforcement of the policies, Osijo said that the cooperation of all stakeholders in the initiative was required.

“The insurance practitioners, regulatory bodies for all building professionals and government should be involved in the enforcement process,” she added.

She explained that the campaign should not be continuous all over the country, in order to drum it deeper into the consciousness of the people across the country.

The NCRIB boss also added that when there was a proof of sanction, people would tend to comply.

The Managing Director, Continental Reinsurance Plc, Dr. Femi Oyetunji, said that there was the need for the industry to do more education for the public on the compulsory insurance policies.

He said, “We need to educate the public more, but more importantly, I think stakeholders should know that insurance is part of financial plan and management; insurance should not be the last thing somebody should think about.”

The reinsurer encouraged the public to protect themselves with insurance because there were several uncertainties in the world.

According to him, insurance is about protecting people from uncertainties.

Oyetunji, who observed that NAICOM was doing a lot in creating awareness in that regard, urged stakeholders to support it.

Commissioner for Insurance and Chief Executive Officer of the National Insurance Commission, Mr. Fola Daniel, said that the MDRI would help in the sanitisation, modernisation and expansion of the insurance agency, wiping out of the fake insurance institutes in Nigeria, adoption of risk-based supervision and solvency-focused regulation by the industry.

According to him, the initiative will also look into issues such as bridging the skill gaps among the young insurance practitioners as well as building consumer trust and confidence in the insurance mechanism.

He said, “The enforcement of compulsory insurance in Nigeria is one of the commission’s initiatives aimed at fulfilling its statutory responsibilities of opening and developing the insurance market.”