Towards ensuring level playing ground and guard against unprofessional rate cutting by operators, in a bid to win big accounts, the Nigerian Insurers Association (NIA), said it has concluded plans to introduce rate template for insurance and brokerage firms in the country soon.

Rate-cutting in insurance sector and practice is an unprofessional act of lowering price or charging lower price for insurance coverage in a bid to outsmart other insurers to win big accounts. This practice is currently rampant in Nigeria insurance sector.

The NIA Chairman, Eddie Efokoha, disclosed this while fielding questions from Journalists shortly after the 2016 Brokers’ conference organised by the Nigerian Council of Registered Insurance Brokers (NCRIB) in Abuja.

Efokoha, who prefers to call it appropriate pricing of risks, noted that the practice is common among brokers and insurers, adding that there was nothing wrong for any insurer to give discount to any insured that had not made claims for close to 10 years.

He said: “It takes two to tango. Whatever wrongs, whatever malpractices that may be perceived; believe me, all parts and segments of the market is involved. At the moment, we know that we have not been much disciplined when it comes to pricing our products or services.

“I prefer to call it appropriate pricing, because the issue is that if you have been insuring with me for 10 years, and you have not made a claim, there is no reason why I should not lower my premium and give you some generous discounts. But if you have been making claims, there is no reason why I should charge you the same as somebody who has not made any claim at all.

“So, what we need to do right now is to strategise how to bring back that practice. So, that is why the joint committee, made up of NCRIB members and the Nigerian Insurers Association (NIA), came up with a business procurement guideline.”

Although, the NIA Chairman said that the government has not imposed a rate on the insurance sector, he added that it only advised that underwriters should come up with rates.

He explained that there is a template in place, which needs enforcement after approval by the National Insurance Commission (NAICOM) before implementation could commence.

“That is, basically, why we are waiting. Otherwise, there is a template to correct the issue of rating so that people who did not get involved in products of risks at the beginning, cannot smuggle themselves in only at the time of placement,” he said.

Further, the NIA Chairman gave indications that a set of guidelines meant to ensure good market conducts would be put in place to make operators to be good ambassadors of the sector wherever they are.

He said: “The market-conduct guideline actually specifies that shortly before the end of this year, underwriters are to submit their rates but that has not been fully practiced or implemented. Once that is implemented; it does mean that; once you have given your rate, you cannot go outside it when you are quoting for any new business.”