• Monday, July 22, 2024
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Insurers seeks stronger legal system to get bigger, profitable

Insurers rake in N615.8bn on retiree life annuity

Insurance operators are seeking a stronger legal system and collaboration of lawyers in the enforcement of the different compulsory insurances to make the industry big and profitable.

According to them, the inability of the industry to take advantage of these insurances has led to a situation where the industry’s contribution to GDP is low; low profitability of the business and underdevelopment despite many years of reform efforts.

Insurers who made a presentation at the Business Law Session of the Nigerian Bar Association (NBA) Annual Conference held in Lagos said the insurance industry has huge potential for growth but has suffered largely because of the weak legal system that has made implementation of policies almost difficult.

They however agreed that though a process of amending the insurance laws and coming up with a unified law for operation of insurance in Nigeria has began, it also requires the support of the legal profession to facilitate enforcement.

Sunday Thomas, director general, Nigerian Insurers Association (NIA) stated that the industry would generate more revenue and also become more profitable if sources of premium leakages are blocked.

For instance, he noted that motor insurance contributes about 26 percent of the total industry premium, when only about 10 percent of registered motor vehicles in the country have genuine insurance.

Read also: Stakeholders want a consumer responsive insurance industry

According to him, if there is a strong legal system that would enforce at least motor third party insurance and ensure that about 11 million vehicle in the country carry genuine insurance, then the insurance industry will smile to the bank and make more profit.

“But in a situation where only a handful of the registered vehicles have genuine insurance and out of this small basket we pay large sums of claims to those that suffer losses, then we cannot be profitable,” Thomas said.

Thomas, said even when they industry make arrest and hand over to law enforcement agents, the result is usually not what we expect, so that is our challenge. And this is where the lawyers will come to our aid by helping to provide legal assistance to victims of vehicle accident so that the people who cause accident will pay damages and with that insurance will begin to make meaning to everybody.

Omebo, a broker who represented the Nigerian Council of Registered Insurance Brokers (NCRIB) said one reason insurance has not been very profitable is as a result of government attitude towards payment of insurance premiums.

“Government is the biggest consumer of insurance and when it does not pay premium on time, how do we generate investment returns to meet claims obligations.”

Secondly, he pointed to lack of understanding by generality of the populace on the benefits of insurance. He also joined Thomas in stating that performance bond provided by insurance is not comparable to what is offered by the banks, but still insurance is not well patronised.