New insurance law critical to enforcement of compulsory insurances

The inability of insurance industry regulator, the National Insurance Commission (NAICOM) to effectively enforce the different compulsory insurances and effect punishment on offenders has been linked to weak legislation, BusinessDay has learnt.

According to analysts, the consolidated insurance laws expected to be presented to the National Assembly by the executive arm of government soon if approved would give NAICOM the needed bite to enforce the different compulsory insurances.

Offong Ambah, group chief executive officer, Old Mutual West Africa said the promotion of different compulsory insurances in the Nigerian insurance industry is a healthy development, but stated that efforts must be geared by all stakeholders to achieve enforcement.

Oluwatoyin Jokosenumi, head, FSS2020 Programme Management Officer said the insurance industry in aligning with the Country’s Financial System Strategy (FSS) 20:20 must speed up the review of the drafted NAICOM Act to ensure it addresses the gaps in insurance law and enforcement, operational autonomy of NAICOM and resources to operate.

“Let the industry leverage on the FSS2020 platform to advocate and support quick passage of the bill.” The implication of this is the difficulty by the industry to realise the growth projection in the industry’s development programme code-named “Market Development and Restructuring Initiative (MDRI),” which was launched in 2007.

MDRI, a baby project of NAICOM had projected an increase in industry premium from N164 billion in 2007 to N1 trillion by end of 2012 on the back of successful enforcement of the different compulsory insurances in MDRI.

This project was geared at installing necessary reforms in the area of industry capacity, market efficiency and consumer protection in the Nigerian Insurance market, with the target to deepen, grow and move the industry gross premium far higher through enforcement of different compulsory insurances.

Though NAICOM had attempted enforcement particularly with the Motor Third Party Insurance, but the inability of the different law enforcement agents to prosecute offenders has also frustrated the efforts, while the industry as well has not been able to provide workable strategy to stamp out fake motor certificate. The implication is that a lot of the of the Motor Third Insurance Policies currently in circulation are fake documents obtained at different vehicle registration centres.

The compulsory insurances include Motor Third party Insurance of section 68 of the Insurance Act 2003; Buildings under construction of section 64 of the Insurance Act 2003 and Occupiers liability insurance of section 65 of the Insurance Act 2003.