INSURANCE managers have commended the National Insurance Commission (NAICOM) for transiting to risk-based approach to insurance regulation as it will allow individual companies to grow their capital according to the volume of their businesses.
The Chairman / International Consultant, Global intellectual Consult Limited, Prof Mike Ikupolati, who spoke to The Guardian on low insurance penetration in Nigeria said a risk-based approach to insurance regulation as it is in the UK should be adopted in Nigeria so that the regulator will only concentrate on areas of an insurance company operations that are susceptible to risks and thus minimize business interruptions and enhance insurance penetration in Nigeria. According to him, the risk-based approach will allow individual company grow their Capital according to the volume of their businesses rather than have uniform capitalization where smaller operators have excess capital without avenue for appropriate investment or adequate return on investments of such excess funds.
The insurance penetration in Nigeria is extremely low, he said, such that even in Africa, we are rated behind countries such as South Africa, Ghana, Angola, Kenya.
For instance, in 2011 insurance penetration in Nigeria was 0.6 per cent, increased to 0.7 per cent in 2012; in Angola it was 1.1 per cent in 2011, it dropped to 1.0 per cent in 2012; in Kenya it was 3.2 per cent in 2011, dropped to 3.1 per cent in 2012; in South Africa penetration was 12.9 per cent in 2011. Increased to 14.2 per cent in 2012.
From the above, he said, it has become imperative that Nigeria as the giant of Africa must take some radical decisions and policies to improve insurance penetration such that the Insurance training institutions in Nigeria must introduce Insurance in their curriculum and Government must also set up professional training Institutions for Insurance in Nigeria.
Besides, we need leaders who are visionary, knowledgeable in insurance and who appreciate the roles insurance can play in the socio-economic development of our nation and who can champion the course of Insurance in Nigeria.
Prof. Ikupolati said “Federal Government must therefore accord insurance the right position it deserves in their strategic plans to create an egalitarian society for Nigeria. There should be an Insurance Professional in the presidency to advise the President on policies that will affect Insurance and Pension sectors in Nigeria. This is in addition to the role of the Regulator”.
According to him, the regulatory body, NAICOM, must join hands with the industry to create public awareness for the importance of insurance in Nigeria and research on modalities for effective regulatory framework that will not create unnecessary business interruptions in the practice of insurance in Nigeria.
“The Insurance industry in Nigeria should set up a high-powered national committee on Insurance penetration in Nigeria as a way forward. This committee should include representatives from NAICOM, NIA, NCRIB, CIIN, ARIAN, The POLICE etc. and this national committee should operate via a local government subcommittees in all local government areas of Nigeria. The local government subcommittees will identify the insurance needs at the local levels and inform the national committee who will recommend appropriate insurance policies to meet such needs. NAICOM will then establish or expand their Insurance Public Complaint Bureau to operate in all local government areas of Nigeria to handle any B2C conflicts at that levels.
“There must be a change of attitude to Insurance by the government, the public and insurance practitioners themselves so that the culture of insurance can be built in all facet of our life endeavours in Nigeria. When you have positive attitude to Insurance, I have a positive attitude to insurance, Insurance will penetrate all segments of our society in Nigeria.
“We must remember that a well developed and evolved insurance sector is what is needed for economic development of Nigeria now even than ever before. Insurance can easily provide the required long-term funds for infrastructure development and simultaneously strengthens the risk taking ability of other industrial sectors of the economy, so that together we can build a virile economy for our Nation”.
The commission had announced at the second industry consultative committee meeting held in Lagos between chief executives of insurance companies and officials of the commission, said the main objectives of the regulation are solvency to ensure that insurers have sufficient financial resources to meet their obligations with respect to the insured.
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