In the next few years, the National Insurance Commission(NAICOM) has promised and has put mercenaries in place to deepen insurance penetration and attain N1 trillion annual insurance premium target in the next few years. ZAKA KHALIQ, in this report, examined the possibility.
Insurance is one of the few concepts that encompasses all facet of human endeavour. In a world soaked and surrounded by risks, insurance remains the means of survival.
Life and living is a risk because, as humans, we don’t know the next moment, the risks that may come in a moment.
Insurance has come as a form of succour, a soothing balm for the aggrieved. Insurance is expected to return the sufferer of risks back to its financial position he was before disaster struck.
In developed economies, where most citizens understand the role of insurance in a risky world, people voluntarily purchase insurance to safeguard their assets and lives , among others.
The situation is not the same in Nigeria, as only about N1.5 million Nigerians have any form of insurance coverage in a population of 160 million. This has been tagged as an eyesore, especially, when compared with the level of insurance penetration across African continent. South Africa, Kenya, Ghana, Egypt, among others were far ahead of Nigeria in term of insurance subscription.
To change the narrative, the National Insurance Commission(NAICOM) embarked on the Market Development Restructuring Initiative(MDRI) which also brought about five compulsory insurances in 2009.
MDRI is a medium term plan of the industry mainly targeted at growing the premium income of insurance industry from the initial low level of N164.5billion in 2008 to N 1 trillion between 2009 and 2012 through deepening of insurance penetration. By the end of 2012, the industry annual business still hovers around N200 billion. This led to shifting the plan forward and by the 2019 financial year end, insurance industry was said to have recorded between N480 to N500 billion annual premium income.
The compulsory insurances include; Motor Third party Insurance of section 68 of the Insurance Act 2003; Buildings under construction of section 64 of the Insurance Act 2003; Occupiers liability insurance of section 65 of the Insurance Act 2003; Group life Insurance in line with the Pension Reform Act 2004 and Health Care Professional Indemnity Insurance-under section 45 of the NHIS Act 1999.
However, the current Commissioner for Insurance, Mr. Sunday Thomas has promised to break the N1trillion annual Premium target, a result he promised to attain through, partnership with relevant stakeholders and rapid adoption of Information Technology in the insurance industry.
At the recent NAICOM seminar for insurance journalists in Uyo, Akwa-Ibom State, these were the highlights and a renewed promise to deepen penetration, increase insurance education and acceptance in the next few years.
The federal government, through the NAICOM, as part of plans to ensure insurance industry generates about N1 trillion annual premium income in the next few years, is already in talks with states governors as well as enforcement agencies to enforce the adoption of five compulsory insurances in the country.
The discussion with state governments, investigation revealed, centres on the need to domesticate insurance laws in their respective states which will make it easier to enforce subscription to, especially, compulsory insurance policies.
With such domestication, LEADERSHIP findings showed that the federal government can now deploy enforcement agencies in States to proscribe uninsured Nigerians, thereby, increasing insurance adoption, acceptance and penetration.
While the commission has succeeded in convincing Lagos, Ogun, Kaduna and few other states to domesticate the Insurance Act 2003 in their respective state laws, plans are ongoing to reach out to other states through the current governors to kickstart the process of entrenching insurance acts in their bylaws.
In this regard, NAICOM had earlier met the chairman of governors’ forum, who is the governor of Ekiti State, Kayode Fayemi, on the need to use the forum to persuade governors to initiate the process of passing insurance laws through the state house of assemblies, to make enforcement easier. The commission is exploring using the meetings of the governors’ forum to discuss with all the state governors and persuade them on this new plan.
Similarly, investigations also showed that state agencies such as Environmental Sanitisation Board, Revenue Generation Board, Federal Fire Service(FFS), the Police, among others, upon getting the States buy-in, would be deployed to enforce peculiar compulsory insurance policies, majorly, to ensure that all public buildings are comprehensively insured.
Th insurance industry regulatory body is equally in discussion with Federal Road Safety Corps (FRSC) and the states’ Vehicle Inspection Offices (VIOs) to enforce comprehensive and third party motor insurance policies.
To this end, aside improving the Internally Generated Revenue (IGR) of the adopting states, the insurance industry would be able to hit the N1 trillion annual premium income benchmark as billions of naira insurance premium would generated through the state apparatus on a monthly basis.
Confirming this development during the NAICOM 2020 Seminar for Insurance Journalists in Uyo, Akwa-Ibom State, the commissioner for Insurance/CEO, NAICOM, Mr Sunday Thomas, said arrangements with state governments are ongoing to deepen insurance penetration at state level, noting that, the insurance industry has brighter prospects to reach and even surpass the N1 trillion premium benchmarks as long as enforcement of these insurances are in place, while checkmating the activities of insurance racketeers who are selling fake insurance certificates to the people.
He equally disclosed that the commission is in discussions with several enforcement agencies on the need to support NAICOM’s drive to not only deepen penetration, but to increase insurance contribution to the nation’s Gross Domestic Products(GDP).
According to him, ” the N1 trillion premium income target is not too much considering the space that is yet to be covered. With improved enforcement and awareness, the industry can realise this in the next few years. We are already in discussion with state governors and relevant enforcement agencies to realise this ambition and the signs are positive. In the next four years of my administration, I want to drive massive penetration, using several mediums, of which Information Technology(IT) will play a major role.”
Driving Penetration Through IT
Determined to elevate the nation’s insurance sector to a globally compliant entity, NAICOM has put in place a real-time digital platform to drive the process and is presently training insurers for seamless takeoff.
The portal, which was in the works for six years, was finally concluded recently as part of ongoing reforms by the current management at the commission.
Deputy Commissioner, Technical, NAICOM, Sabiu Bello Abubakar, said, the new portal was such that wherever anybody is in the world, noting that, information on the nation’s insurance sector would be available to him at the click of a button.
According to him, “we will be looking at the digital world. Part of what we have done so far is the fact that our portal that was on the drawing board for over six years has been fixed. It is taking us from where we are to the next level.
“We have sensitised the technical people in the industry and they have been going through series of trainings. The next thing we are going to do is to engage the industry with IT guidelines. It is no longer going to be historical reporting.”
The deputy director, Information Technology, NAICOM, Abiodun Aribike, in a paper presented at the seminar, entitled: Digital Transformation of NAICOM’s Processes and Procedures, said, anticipated insurance industry digital platform anchored will help monitor claims payment processes.
He added that the digital platform will essentially capture all insurance policies issued in Nigeria.
He posited that aside the aforementioned, the platform will generate a unique policy identification number for all issued policies necessary to ensure fidelity and validity of all policies in the country and also obtains and manages information on all insurance policies, and premiums sold by insurers, brokers and agents.
Aribike said the platform will, “provides information on policies to members of the public and provides management information to NAICOM regarding summary and/or details of all policies by company, broker, and agents.
“Ensure proper accountability of all premium returns by insurance companies, captures all businesses done by every broker through the underwriter, ensures proper accountability of all insurance levies received from brokers.
“Provide easy access to data regarding policies issued, to support analysis and policy based decision making, provides a means for members of the public to validate the Insurance Policy issued by the appropriate Insurance stakeholder and allow Law Enforcement personnel to verify any insurance instrument tendered to them in the course of performing their function.”
On Insurance Policy System, he posited that it is a digital platform that has been designed to capture all insurance policies issued in Nigeria with a unique identifier, stressing that the portal will generate a unique identifier for every policy issued by insurance companies and enable insurance customers and third party entities such as Law Enforcement Agencies to query and validate their insurance policies.
Deepening Financial Inclusion Through Takaful, Microinsurance
The regulatory body said, Takaful and Microinsurance contributed a gross premium of N2.3 bllion as at the end of 31, December 2019 and a total of N650 million was paid as clams in same year.
The breakdown shows that Takaful insurance companies generated a total of N2billion while Microinsurance companies generated N350million in the same year of 2019.
The commission added that the claims paid by Takaful insurance companies stood at N540million while that of Microinsurance stood at N75million.
The head, Takaful, NAICOM, Mr. Zubairu Darazo, said the claims ratio for Takaful Insurance stood at 27 percent and Microinsurance at 21.5 percent bringing the total Claims ratio of both businesses to 24.25 percent as at the end of 31, December 2019.
On why both operations did not do well as expected in 2019, he identified lack of proper understanding of both concepts by the operators and consumers, poor public awareness and lack of skill man power as some of the challenges of their operations.
On the way forward, he said, the commission plans to hold a number of stakeholder engagements, workshops and sensitization programmes in 2021 in pursuit of its financial inclusion strategy which is achieved when all adult population have easy access to a broad range of formal financial services that meet their needs at affordable cost.
He added that with the engagement, the commission projected positive outlook for both Takaful and Micro going forward, adding that, financial inclusion services include but are not limited to payments, savings, loans, insurance and pension products.
He noted that the market development and enforcement of compulsory insurance drive embarked upon by the commission is expected to improve the uptake of Takaful and Microinsurance as well.
Earlier, Insurance and Actuarial expert, Dr. Pius Apere, said, before the N1 trillion Premium target could be achieved, government need to implement some of the insurance laws such as compulsory insurance law with strict compliance.
He was unhappy with the high level of rate-cutting in the industry, which, according to him, is mainly surviving in the brokers’ market.
Apere, who is also the managing director/chief executive officer, Anchor Actuarial Services Limited, said, the target is realistic as long as the insurance industry can go into retail marketing like few operators are doing now through micro-insurance, hence, penetration could be deepened and the N1 trillion premium target realised.
On his part, the executive secretary/CEO, Nigerian Council of Registered Insurance Brokers(NCRIB), Mr. Fatai Adegbenro, has charged federal, states and local governments to lead by example by insuring all their assets, including public building, to increase insurance penetration and profitability.
Government, according to him, should lead in the implementation of the No Premium, No Cover policy by insuring all its buildings while making timely budgetary provisions for insurance of its Ministries, Departments and Agencies (MDAs).