Why we are not at N1Trillion Premium Income – Sunday Thomas
Deputy Commissioner (Technical) NAICOM, Sunday Thomas
The Deputy Commissioner (Technical), National Insurance Commission (NAICOM) Sunday Thomas has explained why the industry’s benchmark of N1 trillion premium income for year 2020 may not be realizable.
Thomas who based his argument on some prevailing issues and circumstances in the market, which he described some as detrimental to the growth of the industry called on the cooperation of the operators and law enforcement agencies.
Thomas who represented the Commissioner for Insurance, Muhammed Kari, at the 2018 end of year workshop organized by the National Association of Insurance and Pension Correspondents (NAIPCO), said “The commission proposed N1 trillion for the market, under certain circumstances and with a lot of assumptions. Part of the assumptions was the effective enforcement of compulsory insurances, assuming that operators would behave rationally.
“I did a comparative analysis between the banking sector and the insurance sector. The Central Bank of Nigeria (CBN) will put a cap on interest rate for certain sector. The banks would violate this rate, not by reducing the rate, but by increasing the rate, using other terminology like administrative fee. If CBN for instance, says the rate should not be more than 9%, the banks would charge 12%,” he explained.
He added, “There was a time that CBN also gave a directive to the banks to have branches, even at rural areas. The banks would violate such directive and pay the penalties for not having branches in those areas because they consider these areas as not viable.
“In my industry, we also commit the same offense, by violating the law. Rather than do it to our own advantage, the operators would reduce it, I just don’t get it. There was a point in this market when 10% for comprehensive insurance was sacrosanct, but later, it came down to 5% and that became the standard. But you and I also know that there was a point that some operators were charging as low as 1%.
“Also, there was a point that 3rd party was N5000. You and I know that it came to a point where people were charging N1000 and the market was producing N200 million. If they decide to charge N5000, what is the market likely to produce? I am just telling you why we are not at N1 trillion.
Again, Awareness is very key, I said, by the end of this year, especially in the life market, if we don’t double our production, then something has gone wrong, but is is so sad to hear that operators have beginning to give discounts to the minimum rates.
He said there is no way the regulator can go after everybody, adding that It is difficult, but he said “it beats my imagination why anyone would want to cut himself.”
According to him, “The federal government through the office of head of service reached out to the commission, they told us to be considerate, that the budget has been passed; we insisted that we will not change our position and that is why you find today that government pays the rate the commission has stated. The commission always reminded them that if they want the operators to pay their claims, then they need to pay the right premium.”
He noted, “With reference to other issues that have been raised, in essence, we need the cooperation of the operators if we must achieve our target. We are not operators, the commission is not also law enforcement agency, and NAICOM is a regulatory body. We need effective collaboration with law enforcement agencies to be able to enforce these laws. Part of those who will help us is the state.”
