Five years ago, the current Insurance Act 2003, was revised and passed to the Executive arm of the industry, specifically, the Finance Ministry, but as it stands, it is yet to leave the Ministry to the National Assembly, although there are steps being taken to get the bill passed under the current administration. ZAKA KHALIQ writes.
Insurance Guideline, regulating the activities of insurance business in the country, is long overdue for revision.
The current Insurance Act 2003, is so obsolete that insurance operators now result to persuasion rather than compulsion for people to subscribe to insurance products and services, a step contrary to what obtained in developed and some developing economies, where someone can be detained for not having insurance.
A product that every citizen ought to have at least one, is now becoming a situation whereby you find maybe, two in every 1000 Nigerians being insured.
On the other hand, the industry’s regulator, that is, the National Insurance Commission(NAICOM) which ought to be the vanguard in ensuring implementation of the already existing insurances have its powers limited by the current guideline and the law enforcement agents could do barely nothing to prosecute insurance violators because the current existing laws did not arm them in that regard.
Hence, insurance penetration, acceptance and adoption continues to be meagre when compared to a huge population the country is blessed with.
Contributing less than one per cent to the country’s Gross Domestic Product(GDP), with a penetration level of 0.6 per cent, even a blind man could see that urgent steps needs to be taken to enhance insurance growth in the country.
Though, the current insurance law has been revised, precisely in 2010, its inability to get the revised bill passed into law, is a clog in the wheel of progress of insurance industry.
In 2010, however, the industry stakeholders brainstormed and came up with Revised Insurance Bill 2010, that up till now, it is still occupying a space on the shelf of the Finance Ministry.
Speaking on this development, the Former Commissioner for Insurance, Mr. Fola Daniel said: “The (current) legislations are not only weak but sometimes difficult to enforce. The regulatory framework is ‘compliance-based’ rather than ‘frame-work’ as is the case with most advanced jurisdictions. This arrangement hardly gives the commission the capacity to take regulatory initiatives in urgent and critical situations.”
To this end, he stated that it was desirable that the various pieces of legislations constituting the existing legal framework be consolidated, noting that the Insurance Law Review Committee appointed by the Federal Government to review the existing insurance laws completed its assignment since 2010.
From then till now, he said: “Since the review of the Insurance Act started, we have had about four different ministers and no minister will rush to take actions on the new bill without understanding the basics of the law.”
He explained that the sector had done all that was necessary to increase sufficient understanding of the law for smooth passage.
But whether the law will be passed under the current administration remains another subject of discussion.
The Revised Insurance Bill
Known as the revised draft Consolidated Insurance Bill, Newswatch Times learnt that the bill was submitted to the Executive arm of government for passage to the National Assembly (NASS) since 2010, but, the bill is still yet to be passed to the legislative house for deliberation.
Though, it was gathered that the operators have initiated several moves to get it through, but when it seems the bill was having headway, change in personnel handling the matter do stall the process.
Some of the legislations that are hampering the growth of the insurance industry and were taken care of in the revised bill include: the Insurance Act 2003; the National Health Insurance Act, 1999; Pension Reform Act 2004; Companies Income Tax, 2007 and Employee Compensation Bill being promoted by NSITF to take Workmen’s Compensation from the insurance industry.
Speaking exclusively to Newswatch Times, the Director-General, Nigerian Insurers Association (NIA), Mr. Sunday Thomas, said the revised bill, when in operation, would ensure that every people have insurance cover, while mandating Nigerians to have insurance cover, especially, the compulsory insurances.
The bill, he pointed out, will generate more businesses for insurance industry, thereby generating premium income that will positively affect the balance sheet of underwriting firms in Nigeria.
This, he pointed out, will grow and develop insurance industry, thus, making it a reference point in the national discourse and economic planning.
He said the current guideline restricted operators from carrying out certain functions, especially, in the area of implementation of the five compulsory insurances.
Pleading on the parties involved, to as a matter of urgency, speed up the process, to pass this bill into law, he said the passage, would rewrite the history of insurance landscape in the country.
When the bill is passed into law, he hopes that insurance industry is able to maximise and take advantage of all the prevailing opportunities in it, saying, this would make the sector assume a leadership position in Africa’s insurance market and make significant contribution to the Nigerian economy in the nearest future.
Insurance Veteran and Expert, Professor Joe Irukwu, said a rigid laws; state of the nation’s economy; misconception about insurance by the insuring public and self inflicted practice by the sector are areas the revised bill will try to address.
“Some of the reasons why insurance industry has not made the desired impacts are simple: Some based on the laws; some on the weal state of our national economy and others based on certain misconceptions about insurance from the public and some are self inflicted by the industry itself,” he said.
He said when the bill is eventually passed into law, it will change the face of the industry.
He said: “It will change the face of the industry and everybody will be better for it. I pray that the National Assembly will take the matter more seriously and try and fast-track its passage into law. I think it will help to improve insurance awareness, consciousness and the development of the insurance industry.”
Agitations for the passage of the bill
The Commissioner for Insurance, Alhaji Mohammed Kari, had advised the Federal Government, through the new Finance Minister, Mrs. Adekemi Adeosun, to assist the insurance industry in the process and enactment of the revised insurance law.
Kari, who gave the admonition at the inauguration of Insurers’ Committee in Abuja, noted that the industry has been yearning for a review of the Insurance laws in the country, and that an insurance bill was drafted and submitted to the Ministry of Finance with the full involvement of all stakeholders, almost five years ago.
According to him, “Almost five years later, nothing has been heard of it. We strongly solicit the Minister to see to the process and enactment of this Law so as to enable the industry play its rightful part in the developmental programmes of the country.”
Feelers from the industry over the weekend shows that the operators as well as the regulator are mounting pressure on the current Finance Minister to ensure that the right thing is done at the Executive arm, so that it can be quickly passed to the National Assembly for consideration.
Speaking exclusively to Newswatch Times over the weekend through a phone interview, Sunday Thomas said: “We have consistently been discussing with the regulator(NAICOM) and we even met last week(a fortnight) with the representative of the Finance Minister and the honourable Commissioner of Insurance has expressed the desire of the industry to get the bill passed.”
The bill, which he said, is an all-inclusive bill, will promote inclusive insurance, adding that, “and the inclusive insurance would deepen insurance, because it is going to bring in Takaful and the Microinsurance, which is going to deepen the market. Also, the regulator would be more empowered to carry out their regulatory oversight and I think all these are good for the market.”
Speaking exclusively to Newswatch Times, in the same vein, Managing Director, Anchor Insurance Limited, Mr Mayowa Adeduro, said NAICOM, as a regulatory body, was working with relevant parastatals in government as well as to get lobby votes so that the bill will seek the cooperation of the National Assembly to get it passed into law.
“So, the new commissioner for insurance, apparently, is aware of this, and he is going round the ministries to sensitise them and thereafter, to National Assembly(NASS) so that they know it’s important because it’s all to the good of the industry and the growth of the entire economy,” Mayowa said.
While believing the new bill would enhance the autonomy of NAICOM, he said the existing relevant insurance laws have a lot of shortfalls in term of capacity to implement it.
“For instance, a fine of N5,000 for somebody violating a provision. What is N5,000 to the magnitude of the offence committed? May be, 10 years ago, it’s a lot of money, but it doesn’t fit into the current reality. So, anything that will enhance the autonomy of the regulatory body to perform better, is good for the industry,” he pointed out.
Stating that the revised bill will criminalise defaults to certain insurances, he said the new bill, when passed, would address the outright violation to public and motor insurances, among others.
To him, “I mean, there are a lot of housing collapse here and there, vehicles are not properly insurance, which has to do with building and motor insurance. The provisions are there but there are a lot of lacuna that is affecting its implementation. There is no serious interface between the regulators and other agencies of government that will make it mandatory on people to insure their building because of these shortfalls. The bill, if passed, will bring sanity into the system.”
Meanwhile, the National President, Association of Registered Insurance Agents of Nigeria(ARIAN), Mr. Gbadebo Olameru, was unhappy that his association was not allowed to have input into the revised insurance bill, before it was concluded, despite the fact that the agents are prominent driver of insurance products and services. Though, he believes the underwriters might have contributed on their behalf, but that it can never represent the full interest of the agents.
“There is one or two deficiencies when it comes to agents of insurance. We are not carried along in it. We will appreciate if we are still given opportunity to add one or two things into it, so that the bill can be encompassing. If the bill is passed, definitely, it will change a lot of things in the industry,” he pointed out.
Holistically, he said the revised insurance bill is a good development, because it will dot some I’s and cross some T’s, stating that the issue of rate-cutting, fake insurance, among others would be amicably addressed in the yet-to-be-passed Revised Insurance Bill.