The nation’s insurance industry in the last six years witnessed significant improvement in premium collection following the implementation of ‘ No Premium No Cover’ policy, but the non-enforcement of different compulsory insurances also promoted in the industry did not help the significant expansion of the market.
‘No premium no Cover’, a government policy championed by the National Insurance Commission (NAICOM) provided in Section 50(1) of the Insurance Act 2003 was implemented to help collection and bring to an end era of huge unremitted premiums, that was not helping insurers meet their claims obligation.
However, the non-enforcement of the different compulsory insurances after it was launched by the regulator, the National Insurance Commission (NAICOM) under the Market Development and Restructuring Initiative (MDRI), has continued to dampen growth prospect of the industry.
This resulted in the slow growth of the industry in terms of new business generations and penetration, and so could not help the sector achieve its projected N1 trillion annual premium set by NAICOM under the MDRI.
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In Nigeria, five types of insurances are made compulsory under different laws, which government identify as necessarily good to enable people to have peace of mind while pursuing their daily economic activities.
The five compulsory insurances under the law are Group Life Insurance in line with the Pension Reform Act 2014; Buildings Under Construction Insurance – Section 64 of the Insurance Act 2003; Occupiers Liability Insurance – Section 65 of the Insurance Act 2003; Motor Third Party Insurance –Section 68 of the Insurance Act 2003 and Health Care Professional Indemnity Insurance- Section 45 of the NHIS Act 1999.
However, except for Group Life Insurance, a provision in the 2014 Pension Act that has effectively taken off and contributed significantly to insurance companies’ life business, and Motor Third Party Policy that is also helping to drive revenue in general business, the other policies are crawling.
The implementation of these policies though was going to spike growth in the insurance market; it was, however, going to benefit the public more. The policies were to help the insured with protection against accidental injuries of whatever form to third parties.
For instance, motorists that take up the Third Party cover were going to enjoy protection against damages or death to third party road users up to N1 million, except for life that has no limit.
These benefits also go to other insured, including doctors and healthcare practitioners, who take professional indemnity, companies who take group life for their staff, and builders and owners of public buildings against accidental death in the case of building collapse or other causes.
Ayo Deji, a motorist who uses a Nissan four-wheel drive had in October 2019 mistakenly ran into a Toyota Camry belonging to someone else and damaged the backside. When quarrel ensued between them, he called his insurer and was surprised that with his only N5, 000 Motor Third Party Policy, his insurance company fixed the Camry without him spending out of his pocket.
Deji said “I was surprised that a N5, 000.00 Motor Third Party policy I reluctantly bought could save me from over a N100, 000.00 damage I caused on another person’s car.
For Deji, compulsory insurance should be enforced on all motorists so that third parties who suffer one form of injury or another could be taken care of and adequately compensated.
