States seeking to increase internally generated revenue (IGR) amid falling monthly allocations from the federation account can achieve it by domesticating the implementation of different compulsory insurances.
This is a collaborative effort being pushed by the National Insurance Commission (NAICOM) to drive penetration of insurance across different parts of the country through partnership with the state governments.
According to Sunday Thomas, commissioner for Insurance /CEO of NAICOM, with the partnership, states are expected to domesticate implementation and enforcement of the different compulsory products in their states.
While the states will earn IGR from the exercise, its citizens are offered risks management protections the different compulsory insurances offer, he states.
He therefore calls on states looking to increase their IGR to take advantage of the opportunity by partnering the NAICOM and the insurance industry to entrench these products into their governance activities.
This has become very important as pressure mounts on revenue generation of governments execrated by falling petrodollar income currently hitting the economy.
As of August 2021, he Federation Accounts Allocation Committee (FAAC) shared a total of N696.965 billion to the three tiers of government, and it was N63.752 billion less than the N760.717 billion shared in July 2021.
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Compulsory insurance, according to the Nigerian insurance journal, is important because it secures the benefits of insurance to average citizens that would not normally benefit.
Compulsory insurance focuses on protecting third-party workers by providing compensation in the event of injury, property damage, or death during work.
The different compulsory insurances as listed by NAICOM include – Third party Motor Insurance, Group Life insurance, health care professional indemnity insurance, occupiers liability insurance or insurance of public buildings, and builders liability insurance or insurance of buildings under construction.
Abdullahi Umar Ganduje, governor of Kano State, during a visit by the management of NAICOM on implementation of compulsory insurances and increasing insurance penetration in the state, said it was a welcome development.
Ganduje, while granting the request of the Commission, directed that a strong committee be constituted immediately to look at the aspect of the implementation of compulsory insurances as well as working with the legislative arm on domesticating the insurance laws in the state.
While commending the Commission on its effort to develop the insurance sector, the governor urged the industry to do more in gaining public confidence and improving public perception of the industry.
On the benefits that will accrue to states from the collaboration, NAICOM said it would include provision of genuine insurance products to the government and people of the state, opening up another veritable source of IGR for the state government, creation of employment for the citizenry, and it would free government of the burden of having to compensate victims from its scarce resources in event of occurrence of mishaps or natural disaster.
