NAICOM steps up collaboration to ensure Enforcement of Compulsory Insurances

Federal Fire Service boss and the Commissioner for Insurance, NAICOM, during the meeting in Abuja yesterday.

Poised  to ensure the enforcement of the five compulsory insurance in Nigeria, the country’s primary regulator, the National Insurance Commission (NAICOM) has continued to collaborate with relevant agencies, institutions, and the state governments in this regard.

To have the buy-in of these strategic stakeholders, the Commission has initiated various programs aimed at reaching out to these stakeholders to sensitize them on the importance and benefits of insurance.

In the past few months, the. Commission has visited the Ekiti State Governor who is also the Chairman of the Nigeria Governors’ Forum (NGF), Kayode Fayemi. The Commission has also organized sensitization workshop for insurance desk officers of Ministries, Departments and Agencies (MDAs) in Abuja recently.

Meanwhile, as a practical approach, NAICOM and the Federal Fire Service have resolved to commence the enforcement of compulsory public building liability insurance across the country.

This resolution was reached recently at the end of a meeting between both agencies at NAICOM Headoffice in Abuja.

The Commissioner for Insurance, during the courtesy visit to Fayemi in September 2020, used the occasion to seek collaboration with the State government to ensure domestication of compulsory insurances in various States just as he called on Fayemi to pass the message across to other state Governors.

He noted that the Financial Services Industry is central to the growth and sustainable development of any nation and state because of its direct impact on access to finance, catalyst to improved income, poverty reduction and stability in the financial system, stressing that as a subset of the Financial Services Industry, Insurance industry is a pivot to guarantee the sustainability of growth and development of the State and its people.

“We have therefore noted the necessity to plant “Insurance” and “People” at the center of any equation that tends to create, enhance, sustain and manage growth and development in any economy.

“As a people, human activities have associated risks and in spite of every precautionary measure to avoid the occurrence of losses or damages, the unexpected still occur.

“In consequence of the losses the victims are prone to sufferings which in many cases may lead to total impoverishment of a large proportion of those affected. To ameliorate the situation of victims, laws have been put in place for an arrangement that will ensure that victims and especially third parties are adequately compensated,” he said.

The Commissioner for Insurance and Chief Executive Officer of NAICOM has, in March this year during the sensitization workshop organized by NAICOM for Insurance Deak Officers of MDAs, implored Federal Government’s Ministries, Departments and Agencies (MDAs) to domesticate and help in the enforcement of compulsory insurances.

Thomas had noted that it has become imperative to put in place measures to guide MDAs on procuring adequate insurances for assets under their watch, stressing that the provision of Section 7 (d) of the National Insurance Commission (NAICOM) Act 1997 stipulates that the Commission shall ensure adequate protection of strategic government assets and other properties.

According to him, Section 7 (f) of the Act, also provides that the Commission shall act as Adviser to the Federal Government on all insurance related matters.
He said it is pertinent to note that the Commission can better achieve its task with the full cooperation of the MDAs.

He said it is very worrisome to the Commission that most assets and liabilities of government are never adequately and appropriately insured, which further accentuated the need for urgent measures to be put in place by the Commission to ensure that government gets value for money in the purchase of insurance by MDAs and that it is the desire of NAICOM to change this narrative for good.

“The essence of Insurance of Government Assets and Liabilities is to cushion the impact and reduce the burden that the government would have to bear in likely occurrences of catastrophic events such as natural disasters, fire, accidents, building collapse, injuries or death to third parties, etc, thereby saving the government money which can be channeled towards augmenting the needs of the citizenry, providing infrastructure, and creating employment, among others.

“As you may be aware, NAICOM in 2009, launched the Market Development and Restructuring Initiative (MDRI) project which aimed at creation of awareness on compulsory insurance products, education of the public on the long-term benefits of insurance to policyholders and the economy at large, among others. While NAICOM bore the responsibility of disseminating key messaging on the benefits of compulsory insurance, we relied on Government Ministries, Departments and Agencies to help domesticate the Initiative in their respective offices and perhaps, serve as the primary vehicles for enforcement of compulsory insurances in their various MDAs,” he said.

Thomas said the sensitization Workshop was aimed at equipping insurance desk officers with the necessary tools to ensure that all MDAs have adequate insurance coverage for all government assets and liabilities to curb wastage occasioned by losses of uninsured assets.

He maintained that it was expected that insurance desk officers will have the capacity to gauge the insurance protection needs of government assets under their purview and provide their principals with technical advice on the required insurance coverage for government assets and liabilities.

Compulsory Insurances and their penalties
Compulsory Insurances are those insurance policies which every person must have or face penalties for default and it is therefore important for people to know what insurance policies are compulsory. In Nigeria, there are five insurance policies made compulsory by the law. It is important to emphasize that these five classes of Insurance are made compulsory under their enabling laws and failure to comply with the law is regarded as a criminal offence and employees can also sue for compensation in a civil suit. The policies and their relevant legislation are as follows:

Motor Third Party Insurance as required by the Motor Vehicles (Third Party Insurance) Act of 1950. This is the minimum insurance that owners of motor vehicles plying Nigerian roads are required to have. The policy covers liability for death or bodily injury to a third party arising from the use of the vehicle. Section 68 of the Insurance Act 2003 extends the liability to cover damage to the property of a third party to the tune of One Million Naira. It also makes it a criminal offence not to have a motor vehicle third party insurance policy and the penalty for non-compliance is imprisonment for one year or a fine of N250,000 or  both.

Employee Group Life Insurance as required by the Pension Reform Act of 2004. Section 9(3) of that Act requires every employer of labour with five (5) or more employees to take out a life insurance policy for a minimum of three times the annual total emolument of the employee. This law is applicable to both private and public sector employees. Failure to comply with this provision is an offence punishable with imprisonment for up to one year or a fine of N250,000 or  both.

Health Care Professional Indemnity as required by the National Health Insurance Scheme Act of 1999. Section 45 of that Act requires all licensed health care providers to have a professional indemnity policy. The law defines a health care provider as any registered Government or private healthcare practitioner and hospital or maternity center.

Insurance of Public Buildings as required by the Insurance Act of 2003. Section 65 of that Act requires the owner or occupier of every public building to be insured against liability for loss or damage to property or death or bodily injury caused by collapse, fire, earthquake, storm or flood. The Act defines a public building as one to which members of the public have access for educational, recreational, medical and commercial purposes. The penalty for non-compliance is a maximum fine of N100,000 or one year imprisonment or both.

Insurance of Buildings under Construction as required by the Insurance Act of 2003. Section 64 of that Act requires every owner or contractor of any building under construction with more than two (2) floors must take out an insurance policy to cover liability against construction risks caused by his negligence or that of his servants, agents or consultants which may result in death, bodily injury or property damage to workers on site or members of the public. This insurance policy also covers liability for collapse of buildings under construction. Failure to comply with this provision is an offence punishable with a fine of N250,000   or three years imprisonment or  both.

Promotion of the full implementation of five different compulsory insurances as provided by law is part of the commission’s developmental project, the Market Development and Restructuring Initiative (MDRI) launched in 2008 during the administration of Fola Daniel.