Road map for developing an inclusive financial system - resident Goodluck Jonathan last year launch the Financial Inclusion Strategy for the country which provided a road map for developing an inclusive financial system. The Nigerian insurance industry has witnessed positive changes in recent times arising from the new reforms embarked upon by NAICOM. Suffice it to say that these reforms were intended primarily to reinforce the Federal Government's Vision 2020:20 of deepening insurance penetration to become the insurance industry of choice among the emerging markets in terms of capacity, safety, transparency and efficiency.
From our internal studies at NAICOM, Nigeria would attain rapid and sustained economic growth if it deepens its insurance penetration whereby more members of the population buy one or more of the available insurance products.
However, Contrary to most optimistic assumptions that the insurance industry will be the next growth sector, the Nigerian insurance industry's performance, despite all efforts at reforms, remains below its potentials as currently only 110 of adult (representing O.8m) population has an insurance policy.
The low insurance penetration can be attributed to many factors. Some are peculiar to the nature of the operating environment, namely limited public awareness, the prescriptive orientation of the Insurance Act 2003 and lack of confidence on the insurance operators by the insuring and non insuring public.
To reverse all these, the Commission did recognize the importance of incorporating micro-insurance and takaful as important vehicles for deepening insurance penetration in the country_ In collaboration with GIZ of Germany and other developmental agencies, the Commission in 2012 conducted a Country-wide Diagnosis study on the viability of micro-insurance in Nigeria.
One of our goals was to generate at the end of the exercise, a document that will enable us take evidence-based decision on the issue of Micro-insurance in Nigeria and also serve as a public resource in its own right. Indeed, the report of the study reveals huge potentials among the low income groups and has consequently been adopted by NAICOM as a working document for the development of micro insurance framework in Nigeria.
To this end, the Commission is at the final stages of developing a reliable micro-insurance framework with clear rules for investments and an inherent flexibility with a view to give insurance providers the needed clarity and freedom to use innovative means to reach this large but underserved segment of the market.
Similarly, NAICOM has recently exposed the Draft Takaful Guidelines to stakeholders for input and now is ready for implementation. Preparatory to the commencement of the operation of the Takaful Guidelines, the Commission has embarked on series of capacity building programs of its Management and Technical staff in order to position the C1mmission to effectively implement and supervise takaful operation in Nigeria.
In order to ensure adequate understanding and achieve greater capacity building among the stakeholders, the Commission had conducted series of workshops and seminars for all stakeholders in the insurance industry. The first of such was held in November last year in Abuja.
I therefore, consider this forum an appropriate platform within the series to raise public awareness on the development of Micro insurance in the country. We have picked some of our Directors who are directly responsible with the task of driving micro insurance development and making it work in Nigeria to speak to you on this.
This is all part of the NAICOM's reform programme to open up and develop the insurance market at the grassroots and by e;~ tension, increase the sector's contributions to the Gross Domestic Product (GDP) of the nation.
In addition to all these and to ensure that the insurance industry leverages the Nigerian Oil and Gas Content Development Act 2010 to increase its participation in petroleum industry insurance, the Commission has developed a guideline for the insurance industry. The guideline serves as a road map on how oil and gas insurance business should be conducted in Nigeria.
The opening up of Agricultural Insurance to all interested insurers is another area the Commission expects appreciable progress. I am aware of the fact that the Nigerian Agricultural Insurance Corporation (NAIC), by an Act of parliament, has the exclusive right to insure all subsidized agricultural risks in the country.
However, huge opportunities still exist in the commercial nonsubsidized agricultural risks sector which other insurance companies could tap into. I wish to encourage underwriters who have the capacity to underwrite the conventional nonsubsidized agricultural insurance to do so, within the provision of the relevant laws.
In due recognition of our primary mandate in the Commission, which is the protection of the interest of policyholders, we have strengthened our Complaints Bureau Unit. The human and material capacity of the unit has been substantially enhanced to meet with the challenge of dealing with complaints emanating from the insuring public promptly and professionally.
Also, in order to finally resolve the contentious issue of delayed or non-payment of insurance premium by the insured, 'the Commission commenced the full and rigorous implementation of section. 50 (1) of the Insurance Act 2003 on January 1st 2013.
The new impetus put into the implementation of the law, which provides that "the receipt of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk unless the premium is paid in advance" will surely improve the financial viability of all insurance companies in Nigeria.
In conclusion distinguished gentlemen of the press, let me once again solicit your continuing cooperation to put the insurance industry in a position to actualize its full potentials. You can do that by what you know how to do best, which is the ability to mass communicate the positive profiles of the Commission and the industry at large. You may also wish to lay strong emphasis on the topical issue of micro insurance which holds greater promise for the insurance sector in Nigeria given the population size of the country.
Fola Daniel is the commissioner for Insurance
By Fola Daniel