• NAICOM vows to improve status
The contribution of the insurance industry to Nigeria’s Gross Domestic Product (GDP) has been weakened by rebasing the GDP that ranks the country as the world’s 26th largest economy.
However, the National Insurance Commission (NAICOM) says the downward trend is a blessing in disguise if operators brace up to the challenge.
While other sectors are still basking in the euphoria of the new economic status, the insurance sector has been advised to re-strategise.
The sector contributed 0.7 per cent to GDP in the old based economy, but it has now reduced to 0.6 per cent. This also affects the ranking of Nigeria’s insurance industry among other nations.
The poor performance of the insurance industry is a bone of contention between NAICOM and the government.
Insurance Commissioner, Fola Daniel, explained that the new status calls for more dynamic strategies by insurance operators to make meaningful contribution to GDP in the next few years.
He urged them to use the various channels NAICOM has opened for the proliferation of insurance products.
Daniel cited the Market Development and Restructuring Initiative (MDRI) in 2009 meant to enforce compulsory insurance and eradicate fake insurance countrywide.
Even though the N1 trillion target is yet to be attained, he disclosed, considerable progress has been made given available statistics, and NAICOM is committed to opening up the insurance market.
His words: “It is appropriate to raise public awareness on the key initiatives of the commission aimed at further opening up the insurance market, and by extension increase the sector’s contribution to GDP.
“These reforms include the introduction of risk based supervision, migration to International Financial Reporting Standard (IFRS) from the Nigerian Generally Accepted Accounting Principles (NGAAP), market conduct reforms, claims settlement reforms, financial inclusion, among many others.”
These reforms, meant to develop the industry and improve the perception of insurance, are in tune with the government’s vision 20:2020 of deepening insurance penetration and making it an industry of choice among emerging markets in terms of capacity, safety, transparency and efficiency.
“Having also recognised the urgent need to develop the retail insurance market, which has remained grossly untapped considering the vast population of the country, it became imperative for the commission to incorporate micro-insurance as an important vehicle for achieving greater insurance penetration,” Daniel added.
In collaboration with GIZ of Germany and other development agencies, NAICOM in 2012 conducted a national study on the viability of micro-insurance in Nigeria.
The report showed huge potential among low income groups and was adopted by NAICOM to develop a micro insurance framework in the country.
To ensure that the insurance industry leverages on the Nigerian Oil and Gas Content Development Act to expand, NAICOM developed a guideline which serves as a roadmap on how oil and gas insurance business should be conducted.
Daniel said NAICOM strengthened its complaints bureau unit to deal with complaints from the public promptly and professionally.
To end the delay or non-payment of insurance premium by the insured, NAICOM also commenced the implementation of Section 50 (1) of the Insurance Act on January 1, 2013.
The Act stipulates that “the receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk unless the premium is paid in advance.”
It presupposes that no insurance cover shall be granted by any insurance company without having received the premium.
“The Nigerian insurance sector has great potentials for massive growth. The population size of the country, if adequately harnessed, gives an added advantage to the insurance industry to further develop its market.
“This is what we intend to achieve with the various initiatives incepted by the commission in recent times,” Daniel said.