The federal government as well as the insurance industry stand to lose about N1.6trillion premium annually to non-passage of Consolidated Insurance Bill 2020 into law, NATIONAL ECONOMY learnt.
The loss of N1.5 trillion annually is linked to non-insurance of vehicles, tricycles and motorcycles, public buildings and rate-cutting, among others, which would have been addressed by the bill if it becomes an Act.
Premium is a fee collected by an underwriter to insure an asset or life within a specified period, which, in Nigeria, is mostly one year for assets with a promise to replace or repair the damaged assets when disaster occurs. Insurers pay a certain portion of this premium as tax to government but federal government will lose this, if the bill that will compel uninsured Nigerians to purchase insurance cover, did not see the light of the day.
Investigation revealed that the industry is losing N135billion annually to fake insurers as well as non-insurance of 8.5 million vehicles on Nigerian roads. Third party motor insurance, which is the least insurance requirement for vehicles plying the nation’s road, which was previously N5, 000 has been increased to N15,000 annual premium and when multiplied by the number of 8.5 million uninsured vehicles, translates to N135 billion that could have come into the insurance industry if the bill becomes an Act.
Moreover, the industry also loses lN30 billion to non-insurance of six million tricycles and N80 billion from non-insurance of about 11 million private and commercial motorcycles, even though, both means of transport are covered under the Third Party Motor Insurance Act.
On the other hand, the cut-throat competition among insurance operators in the battle to capture and win the same insurance businesses through rate-cutting and discount are making insurance industry lose about N700 billion annually as confirmed by the current commissioner for insurance, Mr. Sunday Thomas, some years ago.
In the same vein, insurance industry, it was learnt is losing about N20 billion annually on building insurance, among other compulsory insurances from each of the 36 states of the federation annually, amounting to N720 billion from all the states in a year. This, according to market observers, was because most of the states were yet to domesticate insurance law into their respective state law, thus, depriving the industry such huge premium.
These losses, however, amounted to a cumulative N1.6trillion premium income loss in a year, which could have been recouped if the bill is passed into law.
The exclusion of the Consolidated Insurance Bill 2020 from the list of 15 bills passed last week to President Muhammadu Buhari for assent means that, there is no light in sight at the end of the tunnel for that passage of the Insurance Bill into law nine days to the end of the current dispensation at the federal level.
This development followed the earlier aborted ones in 2010 and 2014, in which great efforts were put into the review by relevant insurance stakeholders, got to the ministry of finance to ministry of justice and waited for presidential approval but it wasn’t to be. In the end, all the efforts were wasted as noting concrete came out of it to the disappointed of market observers who believed the current 2003 Insurance Act, 20 years down the line, is too obsolete to take the industry to its next phase of development.
Similarly, the state of the bill currently, according to experts, may give room for weak capitalisation of the industry, unabated weaknesses of the moribund insurance Act 2003 and at the international level, the risk bearing industry may not be able to play a leading role. Thus, the urgent need to strengthen the laws of the industry which the Consolidated Insurance Bill 2020 would have done if signed into law at such a time like this, they said.
Decrying the exclusion of consolidated insurance bill amongst the 15 bills passed to President Muhammadu Buhari for an assent before leaving office, the chairman of Session, Chartered Insurance Institute of Nigeria (CIIN) Year 2023 Fellows’ Event, Dan Okehi called on Fellows in the insurance industry to arise to their responsibilities as it is their obligations to collaborate with NAICOM in ensuring that the bill becomes an Act.
Okehi stated that, Fellows should note that the burden of growth and development of the sector rest on their shoulders as the industry’s policy makers.
Similarly, a past president, CIIN and former group managing director/CEO, LASACO Assurance Plc, Olusola Ladipo-Ajayi said, “There is supposed to be a synergy between the regulatory body and operators in the industry. The industry doesn’t have much visibility in the public space. This means, we are not in government contemplation. The way we operate the industry has not given us visibility. It should be our priority.”
Coroborating this, an insurance professional and former member of Houses of Representatives, Hon Lanre Laoshe, explained that with the exclusion of the bill among the 15 passed to the President for assent, it means a new process will start again when NASS resume on June 4th, 2023. “If they really want to change their law, let them work or why didn’t the bill go far? “ he queried.
Meanwhile, the managing director, Peninscope Professional Warranty Limited, Mr Tai Adediji pointed out that such omission will hinder development in the industry and put the sector on suspense.
Simlarly, managing director, Risk Sift Consultant Limited, Mrs Janet Omoniyi, said the industry cannot act on it until the president signed it into law. She said, “It means we will continue to use the obsolete law. The industry will have to wait till a new set of NASS comes onboard, brings it up and work on it, then send it to the President. Something must have gone wrong along the line; may be it still needs to be fine-tuned.”
In the meantime, the vice president, Association of Registered Insurance Agents of Nigeria (ARIAN), Mr Kehinde Jegede, regretted that not signing the bill will hinder insurance penetration which is yet to reach 0.5 per cent.
According to him, “A bill acceptable to all players will promote sense of belonging among insurers and bring about healthy competition adding that, ‘it means NAICOM needs to be empowered. There are a lot of innovations it wants to bring about in the industry.’
Moreover, the president, Independent Shareholders Association of Nigeria (ISAN), Mr Moses Igbrude, opined that, “when we visited NAICOM last week, the Commissioner for Insurance, Mr Sunday Thomas, promised that the commission has done some work to enhance insurance industry. If the industry bill didn’t get the assent of present administration, the question is – is it that the bill is not ready? If yes, why is it not ready?. It means there will be delay. The bill will start all over again. Its supposed effect will be postponed. It means it will further delay the enhancement of the industry.”
On the way forward, Ladipo-Ajayi had said, all contending issues should be looked into. On behalf of the industry, he stressed that, there must be someone monitoring the movement of the bill. At every stage, somebody must be on ground, he noted.
Similarly, Laoshe noted that, the industry should go back to the drawing board and find out why the bill didn’t go far.
In the same vein, Adediji stated that, “there is need to find out the reason why the bill has not got to the President table for his assent. Is it human error or the content of the law? Was it a mistake – intentional or sabotage? Is there another opportunity for the bill to get to President Buhari before he leaves office? These are some of the things industry regulator and operators should find out. Even though the president has few days left, as long as he is still in the office, there is still hope if all necessary things are timely done.”
