By Omoh Gabriel
The new insurance policy that premium payment must be up-to-date before claims could be paid applies to government Ministries Departments and Agencies, MDAs, the National Insurance Commission has said.
Speaking at the one-day seminar for Business Editors in Ilorin, Kwara state capital yesterday, the Commissioner of Insurance, Mr. Fola Daniel, insisted that the new policy applied to all insurance holders, be they public or private sector individuals and organizations.
According to him, under the implementation of the provisions of Section 50 (1) of the Insurance Act 2003, “the receipt of 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”.
“The policy applies to all. Those who default in payment of premium cannot enjoy claims. It does not work like that. In the past there were issues of people making claims even when they were not up-to-date in their payment of premiums.
“In fact in the next one week or so, we will issue a circular to all governments organization on the application of the new policy. Some people have raised concerns how government agencies can make premium payments regularly and completely at the beginning of each year but we are sure they can work round it by making available or setting such funds aside early enough in order not to default”.
The strict application of the provisions of that section started in January.
The NAICOM boss added that the policy became necessary to know the true financial position of each insurance company, as according to him, there were situations, in past, where it was difficult to know the true positions of some companies owing to unpaid premiums by policy holders.
Mr. Daniel also said that the Financial Inclusion initiative of the President Goodluck Jonathan administration would receive a boost with the introduction of the micro-insurance practice in the country.
According to him, only 1 per cent of Nigerians adults were insured leaving the larger population without any form of insurance policy whatsoever.
His words, “from our internal studies at the 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 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 1 per cent of adult (representing 0.8 million) population has an insurance policy.
“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 development agencies, the commission in 2012 conducted a country-wide diagnosis study on the viability of micro-insurance in Nigeria.
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.”
Also speaking at the seminar, the Director-General of the Nigeria Insurance Association, NIA, Mr. Sunday Thomas, pointed out that the micro-insurance initiative needed massive public enlightenment campaign in order to make it attractive to the low-income group of Nigerians whom it has been designed to target.
According to him, the requirements for holding such policies should designed in a way that charges are fair; policies easily accessible and should have decent terms of payment in terms of claims.