Why FG may not meet N1 trillion insurance premium target
There are indications that the insurance industry may not meet the N1trillion premium income target set for year 2020, following the refusal by many states to implement Group Life Insurance for their workers.
This would force the industry to shift, for a second time, the target year for this landmark opportunity, having failed the earlier 2012 target date.
The Guardian, reliably gathered that despite efforts by government to partner the 36 states of the federation, including the Federal Capital Territory (FCT), to meet the target, some states are still having challenges on how to pay salary of their workers.
Insurance industry is currently generating about N300 billion yearly premium, which is considered meagre, considering a huge population of 180 million people, with majority of them exposed to daily hazards.
The partnership, spearheaded by the National Insurance Commission (NAICOM), will however, ensure that all the 36 state governments domesticate insurance in their respective state laws.
Moreover, it was learnt that if this could be achieved, each state could be generating about N30 billion premium yearly for the insurance industry, which would, in turn, allow the federal government meet its N1 trillion premium target soon.
Already, NAICOM is holding talks with four states that will serve as pilot states, with a plan to extend it to other states as time progresses.
The four states are Lagos, Ogun, Gombe and Kaduna, which are to domesticate insurance laws in their respective territories, in a bid to enforce the five compulsory insurances at the state level.
With such domestication, The Guardian findings revealed that the Federal Government can now deploy the state apparatus to enforce the five compulsory insurances in the adopting states.
Investigations also showed that state agencies like the Environmental Sanitization Board, revenue generation board, Fire Brigade, among others, would be deployed to enforce builders’ Liability Insurance, as there are plans to raid shops, filling stations and houses to ensure that they have adequate insurance cover.
The move will also ensure that all public buildings are comprehensively insured.
The Federal Road Safety Corps (FRSC) and the states’ Vehicle Inspection Offices (VIOs) on the other hand, would be used to enforce comprehensive and third party motor insurance policies.
To this end, the insurance industry would be generating billions of naira on a monthly basis from these states, while it would also improve the Internally Generated Revenue (IGR) of the adopting states, allowing the insurance industry to eventually realise its N1 trillion insurance premium target.
Speaking exclusively to , NAICOM’s Commissioner for Insurance, Alhaji Mohammed Kari, said: “If we sign a Memorandum of Understanding (MoU) with Lagos State government, which we are almost finishing, Lagos State will use the environmental sanitization agency, revenue generation and Fire Brigade, to enforce insurance adoption.
“So, you can see now how much this will bring to state and insurance industry as well”.
The Fire Brigade, Kari explained, is empowered by law to enforce building insurance and the agency, alongside the states’ inland revenue agencies, will be visiting organisations, offices, shops, filling stations and houses to request for their insurances.
“They will visit your place and ask you to show your evidence of insurance and if you can’t provide that, they will fine you for not insuring. That is under their law. They will seal your business and you will continue paying fines every day till you have insurance. We have finished arrangement with the Fire Brigade.
“At the state level, we are going to go through their environmental Sanitation Board, Inland Revenue Board, among others, to check insurance, and that is why we need to have offices in those states. Any public building or property ought to have insurance and fire brigade will help us enforce this,” he said.
Also speaking in an exclusive interview with The Guardian, the Executive Secretary/Chief Executive Officer, Nigerian Council of Registered Insurance Brokers (NCRIB), Fatai Adegbenro, charged federal, state and local governments to lead by example by insuring all their assets, including public buildings, 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 budgetary provisions for insurance of its Ministries, Departments and Agencies (MDAs).
“Instead of budgeting funds that could have been used for developmental purpose for compensating victims of mishap or natural disaster, insurance is the best alternative, as there is no amount of intervention that could return the victims back to their financial status before the disaster struck, except insurance,” he said.
According to him, this would boost the premium income of the insurance industry and allow it meet the N1 trillion-premium income target.