Nigeria May Continue To Lose N1.5trn Annually In Insurance Sector — Leadership Newspaper
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Nigeria May Continue To Lose N1.5trn Annually In Insurance Sector

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There are indications that Nigeria may continue to lose about N1.5 trillion annually to non-insurance of vehicles, tricycles and motorcycles, public buildings and rate-cutting as there are fears that the Consolidated Insurance Bill may not be passed by the current 8th National Assembly (NASS), LEADERSHIP can report.

The passage of the insurance bill into law would have recoup this huge expected income to the nation’s insurance industry, but with the bill now in the Ministry of Justice, waiting to be sent to the Federal Executive Council (FEC) for onward passage to the National Assembly, experts said all these may not be visible, especially, under the current regime, with focus gradually shifting towards next year’s general election.

For the bill to pass into law, it has to get to the NASS, pass through the first and second readings before it is referred to the House Committee on Finance and Insurance Matters. This committee is expected to call for public hearing on the bill, thereafter, send its submission to the National Assembly and will now decide whether to pass the bill into law or trash it. 

All these processes are time-consuming, with most senators already jostling for re-election. Insider source in the senate chamber, revealed that by August, the chamber would be preoccupied with the preparation for the next election, hence, may only attend to old bills that have been submitted before it, a long time ago.

The consolidated bill, if passed into law, is expected to prescribe stiffer punishment for insurance evaders as well as rid insurance industry of rate-cutting. To this end, if the law is not being put in place, the industry will continue to lose N1.5 trillion annually, until the bill, which is a revised edition of the law, become an act of parliament.

LEADERSHIP investigation reveals that the country is losing N45 billion annually to fake insurers as well as non-insurance of 8.5 million vehicles on Nigerian roads. Third party motor insurance, which is the least insurance requirement for vehicles plying the nation’s road, comes at a fixed price of N5, 000 for privately used saloons and Sport Utility Vehicles (SUVs), while commercially used vehicles are charged N7,500.

Moreover, findings showed that eight million out of about 11 million private and commercial motorcycles in the country have no form of insurance coverage at all, thus, denying insurance industry N80 billion annual premium while also losing N30 billion to non-insurance of six million tricycles, even though, both means of transport are covered under the Third Party Motor Insurance Act.

On the other hand, the cut-throat competition among insurance operators in the battle to capture and win the same insurance businesses through rate-cutting and discount is making insurance industry lose N700 billion annually.

In the same vein, Insurance industry is losing about N20 billion annually on building insurance, among other compulsory insurances from each of the 36 states of the federation annually, amounting to N720 billion from all the states in a year. This, according to market observers, was because most of the states are yet to domesticate insurance law into their respective state law, thus, depriving the industry such huge premium. These losses, however, amount to a cumulative N1.5 trillion premium income loss in a year.

Speaking on the consolidated bill, the commissioner for insurance, Alhaji Mohammed Kari, said, “since the bill is an executive bill, it will go from the Finance Ministry to the Attorney-General of the Federation to the Federal Executive Council (FEC) and then to the National Assembly. Currently, it has been submitted to the Attorney General of the Federation for legal review after which it will now go to FEC.”

Similarly, the deputy commissioner, Technical, National Insurance Commission (NAICOM), Mr. Sunday Thomas, said, the commission can only persuade those in charge to speedy up the process to ensure that it gets to the NASS on time for deliberation, adding that, the insurance industry cannot influence the bill until it gets to the National Assembly.

He said the revised bill, when in operation, would ensure that most people 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, according to him, will grow and develop insurance industry, thus, making it a reference point in the national discourse and economic planning. Thomas, while commenting on rate-cutting that has deprived insurance industry about N700 billion annually, said, this development has forced insurers to be surviving on investment incomes.

According to him, “the risk insurers are carrying is over N1 trillion and the premium is still at N350 billion. We (insurers) take 30 per cent and discount 70 per cent.”

Managing director, Law Union & Rock Insurance, Mr. Jide Orimolade, speaking on the N720 billion lost to non-insurance of public buildings at the federal and state levels, urged the insurance industry to unite in the creation of awareness on building insurance. Though, he said, Lagos State is fully aware about it and it is planning to implement it, he pointed out that other states must also be informed through massive awareness campaign on builder’s liability insurance.

According to him, “our appeal is for this to be enforceable. So, it is all about enforcement, once the enforcement is put in place, I believe that people will key in; they have no choice.”

Also, the executive secretary/CEO, Nigerian Council of Registered Insurance Brokers (NCRIB), Mr. Fatai Adegbenro, charged federal, states and local governments to lead by example by insuring all their assets, including public building, to increase insurance penetration and profitability.



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