Chiamaka Ajeamo, [email protected]
Nigerian insurance experts have raised the alarm over an estimated N1 trillion annual loss in the industry due to low inurance penetration and policy uptake by the citizens.
Worried about this development, stakeholders have called on the National Insurance Commission (NAICOM) to enlist the services of law enforcement agencies to achieve effective implementation of the compulsory insurance policies in Nigeria to further deepen insurance acceptance and equally grow the nation’s Gross Domestic Product (GDP).
Those who commented on the low insurance penetration noted that aside involving law enforcement agents to drive and recover the N1 trillion yearly loss in the sector, regulators should also collaborate with the federal and state governments to ensure proper implementation and enforcement of compulsory insurance scheme.
Reports have it that the insurance market has the potential to generating about N30 billion premium from each state in Nigeria if only the seven mandatory insurances can be adopted.
The compulsory insurance policies stipulated by the Nigerian Insurance Act of 2003, include the Motor Third Party Insurance, Employee Group Life Insurance, Health Care Professional Indemnity, Insurance of Public Buildings, Buildings Under Construction, Aviation Third Party Insurance and Marine (Cargo) Insurance.
These laws were endorsed by the NAICOM) about 10 years ago through its project on Market Development and Restructuring Initiative (MDRI).
The Director- General, Nigerian Insurers Association (NIA), Mrs. Yetunde Ilori, told Daily Sun, that compulsory insurance include liability policies formulated by the government meant to protect the people against accident, death and infringement of their rights in the course of other people’s activities.
“We have obligations towards other people thus, with the compulsory insurance policies government’s aim is to ensure through the law that our responsibilities either by driving our vehicles on the road, employing people in organisations, or through services we render to others are safeguarded in case anything happens by the virtue of risks they are exposed to.
“It is to ensure that the risk exposed to others when it crystallizes, the people that are either injured or suffer any loss have financial compensation at least to mitigate the loss that they incurred”, she said.
This implies that victims of third-party motor accidents, employees of organisations, occupiers or users of commercial buildings, patients in hospitals who incur damages or die due to the carelessness of medical professionals among others would not go uncompensated when risks happen.
It is not a strange thing in developed countries to sue professional health workers such as doctors, nurses and even hospitals when patients are handled with negligence. When such cases occur, we have scenarios whereby such practitioners either pay direly or have their practicing licenses withdrawn.
However, reverse is the case in Nigeria as most hospitals and health practitioners do not have professional indemnity policy and do not care because Nigerians are highly ignorant of their rights and benefits embedded in insurance covers.
The situation appears to be the same for other forms of mandatory insurances, with Nigerians’ apathy towards the adoption of insurance policies is largely related to ignorance and religious belief, according to experts.
Challenges facing adoption of compulsory insurance
In an interview with Daily Sun, the Team Lead, Industrial YOA Insurance Brokers, Mr Ladi Oyekan, said the penetration rate of compulsory insurance in Nigeria is less that two per cent and this is attributed to the ineffectiveness and obsoleteness of the enabling laws which ought to ensure that enforcement is followed to the latter.
Oyekan added that another problem hindering the low uptake of compulsory insurances in Nigeria, is the inability of the government to set examples for Nigerians by taking up these policies themselves.
“Aside the third-party motor insurance policies and the employee group life no other compulsory insurance is taken seriously in the country. If you look at the number of building constructions that take place in Lagos alone, it is enough to increase our insurance penetration but there is no enforcement on the part of the government”.
“Most government constructions do not have insurance backing it up. For over two years now the Federal Government have not paid for their group life insurance but they made the law that all employers must have it. How do they expect Nigerians to adopt it when they are not setting good examples?, he inquired.
Also commenting, the Managing Director/CEO, Blue Pearl Konsult Limited, Chief Chris Obi, while speaking at a forum in Lagos recently said, the situation of Nigeria laws, especially in insurance, has been stagnant for too long that both insurers and the insured do not feel fully protected.
He posited that “even the available laws are poorly enforced, so there are no consequences for breaking insurance laws, especially by insurers. Rather than deepen insurance, people are scared and confined to only the needful”.
Speaking on the way forward, he said, “By-laws should be created out of the federal law for a better enforcement.
“Government should champion some of the compulsory insurances by purchasing it themselves. They should let people know that even as the government are not excluded from doing the right thing. When they set their foot in the right directions, others will follow suit.
“By so doing the government can now enforce it using their agents that collect tax fares to ensure that they checkmate contractors, organizations, professional health care givers, hospitals, among others when they fail to acquire these compulsory insurance policies, they should be sanctioned. When the people know that the government themselves are not violating the laws, people will take the law seriously”, he said.
On his part, Insurance expert, Mr, Malachy Maduako, said that for the uptake level of compulsory insurance to grow, the federal government need to attach security agencies for appropriate implementation and enforcement. These security agencies should visit companies from time to time as well as engage in door-to-door awareness educating Nigerians on the importance of obtaining such insurance policies.
He added that insurance companies should also live up to expectations in terms of service delivery and the settlement of benefits as at when needed in order to convince Nigerians as non-settlement of claims always make people shun purchasing insurance policies.
In the same vein, the Executive Secretary/CEO, Nigerian Council of Registered Insurance Brokers (NCRIB), Mr. Fatai Adegbenro, charged the federal, states and local governments to lead by example by insuring all their assets, including public building, to increase insurance penetration and profitability.