Fola Daniel Commissioner for Insurance
An expert and insurance professional has taken stock of the recent flood ravaging several states in the country, saying it constitutes serious threat to takaful, micro-insurance and the Market Development and Restructuring Initiative (MDRI) programme.
Speaking to THISDAY on condition of anonymity, he expressed regret that the same low income earners, who make up the target-market for micro-insurance, takaful and some other products being projected by MDRI, were victims of the flood, which in essence eroded their means livelihood, incomes and ability to pay for insurance services.
MDRI, an initiative of the National Insurance Commission (NAICOM), is a medium term plan spanning across 2009 and 2012 meant to grow the insurance industry’s premium income to N1 trillion by the end of this year from N160 billion.
It also seeks to create about 50,000 fresh jobs through the Agency Network System while raising the contribution of the industry to the nation’s Gross Domestic Products (GDP) significantly.
The scheme is intended to exploit the potentials inherent in green zones as insurance of public buildings and buildings under construction, group life insurance scheme as well as motor insurance among others.
It is expected to continue till 2012 when expectedly, expansion of the industry’s underwriting capacity of the industry, market efficiency and consumer protection would have been attained.
Reviewing the impact of the flood on the insurance industry, the expert said, “there is no gainsaying the obvious fact that our market will be threatened by these events.
“You expect that premiums to the industry will reduce and this is a major challenge for MDRI when we look at growing the retail market. Now, if these are the people we are focusing on, small peasant farmers and rural population and they are battling for survival, insurance will be the last thing that will be in their priority list.
“MDRI might suffer some little setbacks because these people will need to be re-established to get a decent accommodation and guaranteed survival before insurance is looked into. I believe the flood will impact on the level of premium being expected in the industry,” he said.
The expert highlighted the fact that Nigeria was never classified as a natural disaster zone before now and that the industry never envisaged the present challenges, adding that going forward, insurance operators in the country would start taking this into consideration when making business decisions.
With MDRI, NAICOM seeks to carry on the first phase of the reforms in the country’s insurance industry. It is premised on four key areas namely; enforcement of compulsory insurance products, sanitisation and modernisation of the insurance agency system, wiping out of fake insurance institutions and introduction of risk-based supervision.
It is also expected that as fallout of the collaboration between the different government and self regulatory authorities involved in the process, revenues would be generated for the Fire Service through the establishment of the Fire Service Maintenance Fund.
In addition, it is expected that the collaboration between the Police, Vehicle Inspection Officers (VIO), Federal Road Safety Corps (FRSC), Fire Service, Planning Authorities, and Council of Registered Engineers in Nigeria (COREN), Nigerian Insurers Association (NIA), Nigeria Council of Registered Insurance Brokers (NCRIB) and Association of Registered Insurance Agents of Nigeria (ARIAN) would make things better.