Nigeria insurance law for review to remove obstacles to growth

By Business.am.

Abubakar Sani, chairman of National Insurance Commission (NAICOM) has been sounding upbeat lately in apparent show of a desire to see the industry rise from its doldrum and march towards growth.

His recent sound bite on the industry is that he and his team at NAICOM have hatched a plan to analyse the legislative framework underpinning activities in the industry with a view to determine if there are any parts of the law that are hindering growth of the sector in the country.

In particular the Commission plans to take a forensic look at the Insurance Act, said Sani, who took charge in May, in a media interview.

“For instance, we will look at issues around share capital. This time, instead of share capital, we will talk about risk-based capital,” Sani said.

The commission is looking to expand the reach of insurance and would like to push microinsurance to address the needs of small businesses in order to drive penetration in a Nigerian market that is largely seen as underperforming despite being Africa’s biggest economy by gross domestic product (GDP) and its largest by population size.

Sani said that his commission was also working on expanding coverage and that it has begun a campaign campaign that would ensure compulsory insurance risks are enforced.

NAICOM officials, he said, are to pay visits to government institutions that are responsible for effecting compulsory insurance, noting that, “We are starting with the Federal Ministry of Finance, Secretary to the Government and Head of Service.”

Government is being targeted because most of its facilities, including those falling under compulsory insurance, are not insured. Sani would be hoping that the visits to such top government officials will enable the commission to draw some senior level attention for enforcement of compulsory insurance at least.

The NAICOM chairman, in offering his view on the issue of the involvement of foreing insurers in the market through investment attraction, Sani said, “We need to change our attitude. The attitude of holding onto businesses should change. It is better to have a stake of a small percentage in a company that will last generations than to hold onto a business that will collapse.

“Also, Nigerian insurers can attract foreign investors if the players have their books well kept and ensure they provide that information when needed. We are asking these companies to attract foreign investors to strengthen their performance and boost the Nigerian economy,” he said.

Sani identified rate dropping or rate cutting by insurers as a major problem that has been brought about by cut-throat competition in the insurance market. The competition is so intense that premiums charged are not sufficient for the risks faced. “It is important to ensure that adequate rates are charged and anyone who is not doing so will be sanctioned,” he added.