The consolidated insurance bill, still in the coffers of the ministry of Justice, may not be passed into law by the current 8th National Assembly. ZAKA ABD-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 prosecuted for non-insurance.
The current insurance 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.
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 has 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 enough 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 and in 2015, its inability to get the revised bill passed into law, is a clog in the wheel of progress of insurance industry.
In 2010, the industry stakeholders brainstormed and came up with Revised Insurance Bill 2010, that its only major achievement was occupying a space on the shelf of the Finance Ministry. It never get to the National Assembly(NASS) before the Goodluck Jonathan-led administration came to an end in 2015.
Moreover, when the current administration, ably led by President Muhammadu Buhari, came into office in 2015, one of its first assignment was to set up a committee to review all insurance related laws and consolidate them into a document now known as Consolidated Insurance Bill, of which the committee finalised its work in that same year. Three years after, the bill is yet to get to NASS and may not even get to the national chamber in the current dispensation as all attention now shifts towards the upcoming election.
The Revised Insurance bill, known as Consolidated Insurance bill is said to still be in the possession of the Ministry of Justice, hence, may not be passed into law by the current 8th National Assembly (NASS), with most senators already jostling for re-election.
This means that insurance industry will continue to lose about N1.5 trillion annually to non-insurance of vehicles, tricycles and motorcycles, public buildings and rate-cutting.
The Consolidated Insurance Bill
Recall that the insurance industry had, in 2015, reviewed the Insurance Act 2003 by harmonising all the existing insurance laws into a Consolidated Insurance bill which was afterwards sent to the Ministry of Finance.
Regrettably, the story making the rounds has been the bill has moved to the office of the Attorney-General of the Federation (AGF), and may soon get to FEC. This speculations has further forced analysts and observers to ask how soon?
LEADERSHIP, however, learnt that the bill proposed heavy punitive measure against insurance evaders, in a bid to increase insurance penetration and enforcement in the country.
The Consolidated bill also seeks to prosecute individuals or institutions operating with fake insurance covers. It also threatens that ant fake insurer caught, will face the wrath of the law.
The proposed bill is said to have also increased the supervisory power of the National Insurance Commission (NAICOM) to enable it successfully carry out its civic responsibility, while enforcing, especially, the compulsory insurances through collaboration with law enforcement agencies captured in the new bill.
Investigations also revealed that insurance brokers also proposef Life licensing period, just like the insurance companies or five years minimum renewal period as opposed to the current annual licensing renewal.
Although, most of the aforementioned issues are already in the current Act, but there were changes to some of the existing sections in a bid to enhance insurance adoption and enforcement in the country.
Moreover, the proposed bill is also expected to make it compulsory for state governments to domesticate insurance laws in their respective states, as only Lagos, Ogun, and some few states have domesticated some part of the insurance laws.
The insurances expected to be domesticated by states in the revised insurance bill include; Motor Vehicle (Third Party) Liability Insurance, Builders Liability Insurance (Buildings under construction), Occupiers Liability Insurance on Public Building, Healthcare Professional Liability Insurance and Group Life Insurance.
While such domestication of insurance law will result in increased insurance penetration and premium income for the industry, it will also create another veritable source of Internally Generated Revenue (IGR) for the adopting states.
Industry observers believe that prompt enforcement of insurance policies in states will hopefully stem the proliferation of fake insurances, and also ensure that the people enjoy the benefits inherent in the consumption of genuine insurance products.
Passing The Bill Into Law
The Managing Director/CEO, Blue Pearl Konsult Limited, Chief Chris Obi, while speaking at a forum in Lagos recently said, the situation of our laws, especially in insurance, has been stagnant for too long that both insurers and the insured do not feel fully protected.
“Even the available laws are poorly enforced, so that there are no consequences for breaking insurance laws, especially by insurers. Rather than deepen insurance, people are scared and confined to only the needful,” he pointed out.
Speaking at an event in Abuja recently, Principal Consultant, Mike O. Onyeka & Associates, Mr. Sam Onyeka, noted that he is particularly worried by the challenge posed by legal framework. By nature, he said, the extant legal framework for insurance business, the Insurance Act 2003 is prescriptive, meaning that the law does not allow the regulator to be innovative or make any changes without reference to the National Assembly.
To him , “the international best practice standard for legislation is to make it mainframe approach. This means that the legislature puts the law in a mainframe and allow the regulator through regulations and guidelines to fill in the details based on the dictates of times and environment.”
The prescriptive legal framework, he stressed, is the main reason for low insurance penetration and sectorial growth in the country, stating that the challenge must be addressed with all the capacities the industry can muster. Applauding the regulator for initiating the Tier-Based Minimum Solvency Capital (TBMSC), he said, it can never be implemented under the Insurance Act 2003 as the current Insurance Act allows increase of minimum capital across the board (Section 9 (4)), but not solvency margin. The policy was later cancelled by the commission.
Similarly, he is afraid that the proposed State Insurance Producers (SIPs), though,well intended but may not work as the regulator has no authority in law to create SIPs.
“The conditions for licensing insurance intermediaries are specified under sections 34 and 36 of the Insurance Act 2003. You are either a broker or an agent. Section 34 does not envisage corporate agency,” he pointed out. He charged NAICOM to encourage states to take up Brokers licence, as it used to be, and not corporate agency as they have proposed.
The Managing director, Manny Insurance Brokers Limited, Mr. Kayode Okunoren, is optimistic that when the bill is passed into law, it will generate more businesses for insurance industry, thereby generate premium income that will affect the balance sheet of underwriting firms in Nigeria.
This, according to him, will grow and develop insurance industry and thus, make it a reference point in the national discourse and economic planning. He said the current guideline restricted the regulator and operators from carrying out certain functions, especially, in the area of implementation of the five compulsory insurances.
Speaking earlier, the immediate past managing director, Anchor Insurance Company Limited and now Acting Managing Director of Law Union and Rock Insurance PLC, prior to NAICOM’s approval, Mr. Mayowa Adeduro said: “ Nigeria Insurers Association (NIA), Nigerian Council of Registered Insurance Brokers (NCRIB), Institute of Loss Adjusters of Nigeria (ILAN), among others, are critical stakeholders and are interested in the passage of the bill into law.”
He posited, “of course, a committee was set up to review the existing guideline by the minister of finance, it has been passed to the ministry of finance and now in the ministry of justice. Eventually, it will land in the National Assembly and I believe it will be passed into law before the end of this administration.”
President, NCRIB, Mr. Shola Tinubu, believes that the revised bill can be passed into law by the current National Assembly, as there are no ambiguous issues that will delay its passage into law.
THE WAY FORWARD
Market observers 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, they said, the passage, would rewrite the history of insurance landscape in the country.
When the bill is passed into law, experts hope 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.
And unless and until the consolidated insurance bill is passed into law, which will empower NAICOM to ensure enforcement of certain insurances through partnership with relevant law enforcement agents and make relevant stakeholders to be alive to their civic duties and responsibilities, people will continue to evade insurance products and services.
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