With renewed commitment to deepen penetration in the country, insurance industry stands to gain billions of premium income if all the 36 states of the federation can domesticate insurance laws through their respective state assemblies. ZAKA ABD-KHALIQ writes.
Insurance industry is losing about N1 trillion annually from low adoption of insurance by most of the 36 states in the country, LEADERSHIP can exclusively reveal.
Market analysts believe insurance sector is capable of generating about N30 billion premium from each state of the federation if States can enforce, at least, the five compulsory insurances, with the industry expected to gain about N1.1 trillion from such enforcement.
However, the lacuna here is that Insurance Law is an Executive Law, which cannot be effective in States until it is domesticated in the laws through the State House of Assemblies.
Although, the National Insurance Commission (NAICOM) has made moves to persuade States in this regards, Lagos and Ogun States have so far domesticated some insurances in their states, while there are moves by Gombe and Kaduna States to do the same.
With such domestication, it was learnt that government can now deploy the State apparatus to enforce the five compulsory insurances in the adopting states.
The five compulsory insurances are; 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 NAICOM has sealed partnership agreement with these four states, there are plans by the commission to meet with the Governors’ Forum to persuade the remaining 32 States to key into this agenda.
Pains of Non-Adoption Of Insurance In States
On non-adoption of group life insurance, 32 States across the country have failed to insure their workers, as they have no concrete group life insurance cover for over two million civil servants in the affected states, LEADERSHIP can exclusively reveal.
To this end, the families of the deceased civil servants in the 32 states are left to their own fate, as they are not entitled to death benefits meant to sustain the bereaved after the death of their loved ones.
A document released by the National Pension Commission (PenCom) listed the affected states to include: Jigawa, Ogun, Kaduna, Delta, Zamfara, Kano, Imo, Kebbi, Sokoto, Ekiti, Kogi, Bayelsa, Nasarawa, Oyo, Kaduna, Akwa Ibom and Edo States.
Others are; Ondo, Benue, Kwara, Plateau, Cross Rivers, Anambra, Enugu, Abia, Ebonyi, Taraba, Bauchi, Borno, Gombe, Yobe and Adamawa States.
Market observers said non-adoption of group life is exposing the families of their workers to imminent danger should anything happens to workers in the concerned states.
Meanwhile, it was also learnt that about 89,000 federal workers are currently without group life insurance coverage, as the insurance cover they have had expired since 2016.
Responding to this development, the director general, Nigerian Insurers Association (NIA), Mrs. Yetunde Ilori, said, unfortunately, what the PRA 2014 prescribes is that any employer who fails to insure his employees under group life cover, should be a carrier of his own risk, hence, there is no compulsion.
This, she said, makes enforcement difficult, calling for a review of this section to make it compulsory on all employers of labour, including, state governments to put in place, group life cover for their workers.
According to her, “Yes, different states have been approached by life insurers, but the enforcement is not like that of the Contributory Pension Scheme(CPS), because it just says that where there is no group life put in place, should there be any death, such employer should take up the responsibilities. I think that is an aspect that should be reviewed.”
Speaking in an interview with LEADERSHIP, the director, Centre for Pension Right Advocacy(CPRA), Mr. Ivor Takor, charged the unions in the public sector to rise up to the plight of the state workers by compelling these state governments to insure the lives of their workers. While fighting for salary increment, he said, the pension and insurance packages of workers should also be utmost.
“It is now obvious to everybody that the state governors cannot do anything for the welfare of the workers unless they are compelled to do it. So, if the public sector unions don’t get up and ensure they implement these things, those states will not do anything,” he said.
The Gains Of Insurance Adoption In States
With domestication of insurance laws in states, market observers believe each state could be generating about N30 billion premium annually for the insurance industry.
Moreover, with such domestication, it was learnt that government can now deploy the state apparatus to enforce the five compulsory insurances in the adopting states.
Investigation shows that state agencies such as Environmental Sanitisation board, Revenue Generation Board, Fire Brigade, among others, would be used to enforce Builders’ Liability Insurance, while the Federal Road Safety Corps (FRSC) and the States’ Vehicle Inspection Offices(VIOs), on the other hand, would be used to enforce Motor Insurance policies.
To this end, insurance industry would be generating billions of naira on a monthly basis from these states, while it will also improve the Internal Generated Revenue (IGR) of the adopting states, allowing the insurance industry to eventually realise its N1 trillion insurance premium target.
Speaking on this development, 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 Environmental Sanitisation board, Revenue Generation Board, Fire Brigade- which we (NAICOM) have a signed an agreement with and since every state has its own fire brigade, the business would be done state by state- to enforce insurance adoption. So, you can see now how much this will bring to state and insurance industry as well.”
The Fire brigade, he said, is empowered by law to enforce building insurance, and the agency alongside the State Inland Revenue 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 there 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,” he said.
Such development, he pointed out, would also generate employment for the adopting states, while transferring the burden of compensating the victims of inferno from the government to the insurance companies. This, he said, will allow the government focus more on developmental projects, rather than looking for money from the little resources of the state to settle victims of inferno. Kari implored states to insure all its assets with genuine insurance companies, in a bid to curb the spread of fake insurers.
NAICOM’s Deputy Commissioner, Technical, Sunday Thomas, said the regulatory body intends to meet with the Governors’ Forum so that the commission can get the buying in of the state governors as a group.
Thomas said: “Part of the selling point is the fact that it is going to enhance their employment initiative, increase their IGR, among other advantages.”
Earlier, 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.