Experts have said that the newly signed Nigerian Insurance Industry Reform Act has strengthened the ability of the sector to improve its contribution to the nation’s Gross Domestic Product and as well established the policyholders as a major reason for the new Act that makes claims payment a standard obligation.
The Commissioner for Insurance Mr. Olusegun Omosehin, who was represented by the Director, Legal, Enforcement, and Market Development, NAICOM, Dr Tamis Usman, said: “One of the key things is the repositioning of the sector in terms of the financial muscle. It has now introduced two tiers of capital. The first is the minimum capital requirement. Now the minimum capital has been shored up to N10 billion for Life, N15 billion for Non-Life, and N35 billion for Reinsurance. What this translates to is that insurance companies will have more capacity take care of higher risks and retain local content. This will also lead to economic growth, employment generation, and more retention of local capacity.
“The second layer is the Risk-Based Capital. This is not a one-size-fits-all. It is time for operators to provide capital that matches the level of their risk exposure. What the regulator is expected to do is to determine that for an underwriter to underwrite any level of business, you must have a certain level of capital threshold in relation to your risk exposure. It also translates to building confidence in the insurance sector, and I am sure that for any company to be able to underwrite any kind of business, it has the financial capability to do it.”
Usman explained that with the NIIRA 2025, companies will be able to pay claims, saying, “The role of the regulator is to make sure that operators pay claims. Another thing that the new Act is encouraging is simplicity of operations. In this case, the proposal form should be as simple as possible for the prospect to be able to understand what he/she is going into.
“The law also provides that before the commencement of your policy, you must issue a policy document which contains the terms of the contract. This was not captured in the previous legal instruments. The law says the policy document must be in simple and clear terms that anybody can see, read and understand. This alone will build trust and boost public confidence in the insurance sector.”
The Director-General, Nigerian Insurers Association, Mrs Bola Odukale, in her comments said that the NIA was going to ensure implementation of NIIRA.
“One thing is to have a law, another thing is to get those laws implemented. If implementation is not strong enough, it is just as good as papers in which we have all those laws written. This is where NIA comes in terms of implementation. We, as NIA, our members, the operators, our first responsibility is to ensure the implementation of these laws as the regulator begins to come up with different regulations around the different aspects of the act.
“One of the ways we will also ensure that implementation happens is that we are well aware of self-regulation in this industry. How much are we willing to push ourselves to ensure that we follow through with the dictates of those acts so that indeed we can enjoy the benefits that are in the Act? That is the first thing. Of course, when you talk of awareness creation a few members of the insurance public know that there is a new insurance act out. We are going to be working with our members to ensure that we create awareness in this market.
“If you look at NIIRA very well, there are various opportunities that are embedded in that act, for example, compulsory insurance. A tanker on the road is meant to have insurance; the petrol stations are meant to have insurance; buildings under construction need to have insurance; there is insurance for containers. All of these are risks need compulsory cover for the benefits of everybody, the industry and the public, to ensure that there is protection for the risk we are exposed to.”
The Executive Director, Business Operations, emPLE Life Assurance, Mr Makanjuola Tubi, speaking on a panel session, said, a major value from the reforms is to reach the underserved population, clearing that this would enhance contributions of insurance and pension to the Gross Domestic Product of the country.
Tubi said, “Regulation has been done trying to enforce and strengthen both the insurance and pension industries. There is a large opportunity there. There is an uncaptured market that is there for the taking. Some of the key things that we as operators need to do and quickly latch on to are how do we take advantage of this untapped market?
