TALKING INSURANCE: REFORMS AND THE INSURANCE INDUSTRY (2)
By Yinka Bolarinwa
Many people do not insure their homes built with millions of naira, and in the case of the businessmen among them, the business premises are largely uninsured. It thus became important to further help the industry, which is why the industry regulator, National Insurance Commission introduced the Market Development and Restructuring Initiative.
According to NAICOM, 'the MDRI project is a medium term plan (2009-2012) of installing the first phase of the necessary reforms in the areas of industry capacity, market efficiency and consumer protection in the Nigerian insurance market. It would deepen and grow the insurance market and move the industry gross premium form N164billion (2008) to I.0 trillion 2012.
Benefits of the Project
At the end of the plan period (2012) the following benefits are expected to be achieved by the Insurance market:
Increase in industry gross premium from N164.50billion (2008) to N1.0trillion by 2012; direct project revenue of N800.0m to NAICOM from implementing the project; Indirect project revenue to NAICOM from increase in ISS levy to N12 billion; revenue to Fire Service by way of fire service maintenance fund; creation of about 250,000 jobs in the insurance industry; lowering of insurance gap from 94% to 70%; increase in insurance contribution to GDP from 0.72%to over 4%; and building consumer trust and confidence in the Nigerian insurance Market
MDRI focuses four (4) key issues:
a) Enforcement of compulsory insurance products;
b) Sanitization and modernization of insurance agency system;
c) Wiping out of fake insurance institutions; and
d) Introduction of risk-based supervision
Compulsory insurance products
i) Enforcement of Compulsory Insurance Products in Nigeria - There are six insurance products made compulsory by law by the Insurance Act 2003 and other legislations and NAICOM intends to enforce these products. They are:
Group life Insurance in line with the Pencom Act 2004; Employers liability in line with the Workmen's Compensation Act 1987; Buildings under construction-section 64 of the Insurance Act 2003; Occupiers liability insurance -section 65 of the Insurance Act 2003; Motor Third party Insurance -section 68of the Insurance Act 2003; and Health care Professional indemnity insurance under section 45 of the NHIS Act 1999
ii) Sanitization and modernization of Insurance Agency System
The introduction of the Network Agency system which would expand the insurance penetration and provide employment to thousands of Nigerians.
iii) Wiping out of fake insurance institutions
The setting up of enforcement teams in all the 36 states of the federation to monitor compliance with the compulsory insurances. The teams would comprise of the Police, VIO, FRSC, Fire Service, Planning authorities,CORBON,NIA,NCRIB etc.The teams have been constituted and are ready to take off.
iv) Introduction of Risk Based supervision
The movement from compliance based supervision to risk based supervision is the way to go in order to reduce stress and distress from the system.