Industry remains upbeat on premium collection

Barely two months to the end of the first full year of enforcement of “No Premium No Cover”, which commenced January 1, 2013, industry stakeholders are upbeat about premium collection and growing liquidity.

Some of the operators who gave assessment of the industry up to the end of third quarter said it’s been a good year for the industry, as not only did they underwrite quality risks, but collecting premium on those risks made the year worthwhile.

The impact of this policy many not be feasible immediately, but over time you will begin to see the impact on our investment income and the speed of claims payment, an operators told BusinessDay.

Paul Aluko, general manager/CEO, Nigerian Liability Insurance Pool said the National Insurance Commission (NAICOM) should be commended for the initiative and the will power to enforce it, stating that it would get to a time when people will no longer like to drive on the road without genuine insurance.

Analysts say insurance companies’ balance sheets are buoyed now with increased liquidity since the implementation of the “No Premium No Cover Policy” guideline 10 months ago. This policy industry they said have seen positive trends in companies’ cash flow, meaning healthier business and more stability.

Unlike the previous up to 2011, when about 28 percent of premium on businesses were outstanding, the current year has recorded almost zero outstanding in the event of full enforcement of the policy by the National Insurance Commission (NAICOM).

“No Premium No Cover” is an import of section 50 (1) of the 2003 Insurance Act which 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 the insurance risk unless the premium is paid in advance.”

Implementing the law which became effective January I, 2013, NAICOM warn that any insurance company found in its book unpaid premium for policy granted to clients would be sanctioned or license revoked.

Sunday Thomas, director general, Nigerian Insurers Association (NIA) had said the early part of the year were upbeat in terms of cash flow from business generation among insurance companies, and should continue till the rest of the year and going forward.

He said the report so far seem consistent with expectation of the industry, as many of its member companies are testifying to the positive trend.

Thomas stated that this premium will be invested to meet future obligations in the area of claims payment.

Laide Osijo, outgoing president, Nigerian Council of Registered Insurance Brokers (NCRIB) said its delightful to note that the initial apprehension about the workability of the rule “No Premium No Cover” is a bye gone as many of its members and underwriters could testify given the level of cash flow in relation to volume of business.

“There is no doubt that with the level of compliance, the industry would benefit significantly from the rule.”

By: Modestus Anaesoronye