Will new consolidated insurance Bill bring end to ‘rate cutting’?
A major challenge facing the insurance industry today is the act of rate cutting, which has not only affected the sector’s growth, but has also impacted negatively on its development.
Rate cutting is explained to mean a situation where by insurance risks are accepted at premium rates commensurate with the risk carried, which affects payment of claims. It is also called under pricing. It is driven by cut throat competition among operators who will not let a business go for reasons of greed.
While this hydra-headed monster has remained with the industry for long time without remedy despite several market agreements, analysts expect that the New Insurance Bill being expected in the industry would look critically at addressing that problem.
We have had several market agreements in the past which failed because of sabotage, I would expect that this new Bill will look at that issue and address it once and for all; otherwise we are not going anywhere, an insurance CEO.
Some analysts have in the past said the ball falls within the regulator and the reinsurers to stop the act, by not only enforcing it but rejecting risks from underwriters when badly priced. When reinsurance companies reject your risk and you cannot carry it in your books because NAICOM will insist on reinsurance backing, you don’t have option than to do the right thing, the CEO stated.
Kemi Adeosun, minister of finance at the inauguration of the Committee for the Review of Insurance (Consolidated) Bill about 10-days ago said the it’s being reviewed with a view to ensuring it meets all the basic tenants of a Framework Law or a Principle-based legislation.
“Make a comparative review of the Draft Insurance (Consolidated) Bill to align it with the power of other financial services regulators in Nigeria.”
‘Examine current market problems and recommend appropriate regulatory powers to allow the Insurance Regulator act appropriately.’
“Review all other Insurance laws and update the Draft Insurance (Consolidated) Bill to align with international best practice.
Make such other recommendations as you may deem necessary for the overall good of the Insurance Industry.”
The Committee chaired by Omogbai- Omo Eboh, a renowned expert in Insurance Law and Talmiz Usman, head of Legal Department, NAICOM as the Secretary having been given 90-days to submit their report will also as part of its responsibility identify other Nigerian Laws that conflict or compliment the activities of the insurance sector with a view of advising Government of the need to merge, consolidate or repeal so as to have a seamless functional regulation for the sector.
Modestus Anaesoronye