Has the Insurance Act 2003 Made Nigerians Poorer These Past Five Years?


Sunday, May 31, 2020   / 03:27 PM / OpEd by Ekerete Ola Gam-Ikon    / Header Image Credit: Nigeria Insurance Advisor   

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Has the Insurance Act 2003 made Nigerians poorer since the passing of the law, especially the last five (5) years?


A credible question but one I wish to address in a simple exploratory manner.


Did you know that the Insurance Act 2003 essentially holds the key for meaningful insurance experiences in Nigeria and better quality of life for Nigerians, yet WE, the people have ignorantly missed out?


You may be excused for not knowing this, but not excused for not enquiring why? Let me explain.


A cursory review reveals that we may have been seeking to modernise the way we do insurance and digitize the process of reaching and serving customers, and paying very little attention to the benefits the existing law offers. Yes, the laws are obsolete but until the amendments arrive, we have to exercise the aspects that would deliver value to our national economic recovery and growth agenda. How could we have missed all the value the Insurance Act holds while fighting poverty?



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First, let us appreciate the VALUE missed especially in the last 5 years:


1.      In January 2016, the Dr. Omogbai-Omo Eboh led Insurance Law Review Committee appointed by the then Finance Minister was set to undertake its assignment and indeed successfully produced and submitted the report, which had since reached the National Assembly. Unsurprisingly, the Consolidated (Amendment) Bill is yet to be passed and we are waiting while missing much value from the subsisting law. In this regard, besides the value of time, considering that there was a previous failed effort based on the work of the Professor Joe Irukwu Committee of 2009, the strategic value the insurance industry could have given to the economic safety initiatives of the President Muhammadu Buhari administration have been lost. For example, could Nigeria do a Social Investment Programme without insurance and expect any significant changes to the poverty index? Similarly, how would an Economic Stabilization Committee be constituted without insurance and risk management professionals? Will that not leave much value out of the recommendations that would be made?


2.      Nigerians have suffered the pains of motor accidents, collapsed buildings, burnt markets and recently, deaths due to COVID-19 pandemic across the country while the Insurance Act 2003 which amendment we await, provides the following points for poverty minimization:


  1. Section 64 (1) states that "No person shall cause to be constructed any building of more than two floors without insuring with a registered insurer his liability in respect of construction risks caused by his negligence or the negligence of hs servants, agents or consultants which may result in bodily injury or loss of life to or damage to property of any workman on the site or of any member of the Public". Then the same Section 64, subsection 3 states the penalty for contravention thus "A person who contravenes subsection (1) of this section commits an offence and on conviction shall be liable to a fine of N250,000 or imprisonment for three years or both". 


Is it not value to our fight against poverty that the law stipulates the insurance of buildings under construction considering the associated risks? Think for a moment about the news you read or the picture you saw of the lives lost not to mention the damages to other nearby properties;


  1. This same law, in Section 65 (1) clearly states that "Every public building shall be insured with a registered insurer against the hazards of collapse, fire, earthquake, storm and flood." Again, is this not value proposed for all of us by this law? It states in Section 65, subsection 6 that "An occupier or owner of premises who is in default of this section commits an offence and is liable on conviction to a fine of not more than N100,000 or to imprisonment for one year or both". 


Markets and most buildings that have been gutted by fire or collapsed or flooded are properly classified as public buildings, yet when these unexpected and unfortunate incidents occur, we simply cry and make calls for relief assistance from government that already put the law in place, which has been ignored. Why?


  1. Furthermore, Section 68 (1) states that "No person shall use or cause or permit any other person to use a motor vehicle on a road unless a liability which he may thereby incur in respect of damage to the property of third parties is insured with an insurer Registered under this Act". This is basically speaking to the issue of Third Party Motor Insurance, which value most of us are now aware of - that is, ACCESS to not less than N1 million stated clearly in Section 68 (2) of the Act. Meanwhile, the penalty for contravention is equally stated in Section 68 subsection 4 thus "A person who contravenes the provisions of this section commits an offence and liable on conviction to a fine of N250,000 or imprisonment for 1 year or both".


Why would these aspects of the Act that stipulates value in the manner of protection of our lives and punishment for defaulters who cause us pain and anguish wait?


  1. Most importantly, this Act unequivocally states in Section 70, the "Time to settle claims" and in Section 78, the use of the "Security and Development Funds.. for the payment of any claim admitted by or allowed against a registered insurer where such claim remains unpaid by reason of insolvency or cancellation of the registration of the insurer". This is besides the stipulations of Section 70 subsection (1) (b) that "where any claim remains unpaid as provided in (a) above, the insured may request the Commission to effect payment from the statutory deposit of the insurer and the Commission shall have power to effect such payment".


Section 70 subsection 2 declares that "Any insurer who contravenes this section commits an offence and on conviction is liable to a fine of N500,000."


Is it not true that the responsibility to deliver these values clearly rest with the regulator, National Insurance Commission (NAICOM), who by implication, may have inadvertently been denying Nigerians the opportunity of enjoying these values especially saving us the pains and anguish after every disaster?


Indeed, the impact reflects on the poverty index when claimants are left financially weakened while waiting for months and years for payments of their claims beyond "90 days after the issuance of discharge voucher".

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The Waiting Continues, Value Erodes


As Nigerians are made to wait for the Insurance Consolidated (Amendment) Bill to be passed by the National Assembly; wait for the recapitalization of insurance companies to be concluded; wait for insurance companies that are owing claims to pay up and wait for products that suit the needs and lifestyle of young Nigerians and generally, wait for a better insurance experience, Nigerians who have been stretched by the effects of COVID-19 pandemic are more likely to become poorer.


In other words, by the time the Insurance Consolidated (Amendment) Bill is ready, Nigerians might either have adjusted to life without insurance or become seriously unable to pay for insurance no matter the price.


More than at any other time, many Nigerians have learnt their lessons and some have seen the value in putting something aside through insurance but only a few players in the insurance sub-sector are ready for the engagement. 


How long will these waits be? No answers can be seen across the clime.


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Be Advised


I dare to advise these respective groups of Nigerians thus:


Group One which comprises those that desire to buy insurance now; please be advised to engage your insurance agent/broker in what I call "When Claims Happen Meeting" before you commit to the contract. Yes, contract! Some people have failed to see insurance as a contract and often treat it lightly, isn't it?


Group Two which comprises those individuals whose Life policies have matured and they have been waiting for their Surrender Value; please consider taking all available legal steps especially by sending Reminder Letters to NAICOM one last time. As you may be aware, the newly appointed Commissioner for Insurance has expressed commitment to address policyholders' issues.


Group Three which comprises those micro and small business owners who survive daily risks to eke a living; please identify a credible insurance broker/agent that will patiently engage with you to understand your risk challenges and work with you to get a suitable insurance coverage that will ensure you can access credit and safeguard yourself and your business into the future. Some of your peers have relied on insurance to recover from accidents and incidents but may not tell you.


Generally, we hope that conscious efforts will be made by all insurance stakeholders to improve the quality of lives of Nigerians during the waiting period highlighted here.


Nigerians deserve better especially as COVID-19 pants, and thanks to those few bold insurance companies that have shown empathy at this time.



About The Author

Ekerete Olawoye Gam-Ikon, MNIM, CPP, is a management consultant with a specialization in Strategy and Insurance. He is available through e-mail olagamola@gmail.com


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