NAICOM’s MDRI Initiative: 13 Years After

In search for an initiative that will unveil the Nigerian insurance industry to the world for patronage and investment opportunities, the NAICOM launched the MDRI. Ebere Nwoji looks at the success and failures of the initiative 13 years after and the need to launch and implement the proposed second phase.

The National Insurance Commission (NAICOM), in September 2009, launched the much-taunted Market Development and Restructuring initiative (MDRI), a medium term plan of the commission targeted at driving insurance penetration in Nigeria.

The commission planned the launch and implementation of the initiative in two phases saying the first phase would span between 2009 to 2012 while the second stage would span from 2012 to 2017.

Some of the objectives of the initiative according to NAICOM, were to ensure the deepening of the insurance market and moving the industry’s gross premium form the then N164 billion level to NI.1 trillion 2012.

The initiative, according to NAICOM also has the objectives of creating 50,000 jobs in Nigeria through the insurance agency system, fight against fake insurance institutions and ensure enforcement of compulsory insurances.

It is now 13 years since the launch of the first phase of the initiative and the commission is yet to launch the second phase billed for launch and implementation between 2012 and 2017.

Aside this, since then, the commission has sealed the MDRI from public view. Its strategy document has been hid from the public throwing doubt on the level of its success.

Second Phase Delay

For instance, in September 2016, the former commissioner for insurance, Alhaji Mohammed Kari, announced NAICOM’s bid to launch the second phase of the initiative.

Kari, had said that launch of the MDRI second phase would drive the enforcement of compulsory insurance adding that the commission had signed a memorandum of understanding with government ‘s ministries, departments and agencies on Insurance of government’s properties.

According to Kari: “The MDRI is an initiative we would continue with, because it was designed to help the penetration of insurance and we can still do a lot on that. What we have done to strengthen the implementation, is to set up an internal unit that is specifically, assigned to handle public sector insurances and advice.

“Towards that, we have issued a circular to all Ministers; Ministries; the Head of Service; Secretary to the government; Permanent Secretaries; Head of MDAs, including the Chief of Staff to the President. Highlighting to them that the role of NAICOM is ensuring that the insuring public are insured properly.”

“The unit will assist the MDAs in structuring their insurances properly. We have given them a template on information to give. Like how we can access government assets that need insurance, and we are going to work jointly with the Minster of Finance and the Budget office to ensure that these assets when identified and valued appropriately are provided for in the budget and paid for the purpose of insurance,” Kari stated.

Despite the preparations, Kari could not carry out the launch of the MDRI initiative until he left office.
Then came the incumbent commissioner for Insurance, Mr Olorundare Sunday Thomas with his own proposal on the initiative’s second phase launch.

Delivering his welcome address at a seminar organised by NAICOM for the media in Kano, he said the second phase would soon be unveiled.

He said to ensure the success of the initiative, the regulatory body would mark out clear targets and tasks for all stakeholders in the insurance industry, even as he said that the Commission would pursue implementation of compulsory insurances in every part of the country.

He said, “Going forward, we shall vigorously pursue the continued implementation of Compulsory Insurances in every nook and crannies of the country. We are certainly not unaware of the challenges inhibiting the successful implementation of these classes of insurance thus far hence, our resolve to work with relevant stakeholders to ensure a seamless drive.”

It is getting to two years since he made the promise, yet the launch has not seen the light of the day.

Need for Second Phase

Industry stakeholders believe the avoidable delay in the launch of the second phase of the initiative should not have been considering the fact that though to some extent the first phase recorded some level of success, the industry was yet to achieve the exact target that has driven the launch of the first phase of the initiative. The stakeholders cited example of the annual premium income of the industry saying 13 years after the launch of the first phase targeted at shoring up the annual premium income of the industry from the hitherto N164billion level in 2008 to N1.1 trillion by 2012, today unaudited financial statement of the insurance sector as released by NAUCOM for 2021 said the overall premium income of the industry stands at N630.4 billion while assets stand at N2.1 Trillion.

The stakeholders said the mere fact that the industry is yet to achieve the main target of the first phase was enough for the commission to have vigorously pursued the launch of the second phase. Aside the premium income level, the industry is still grappling with overcoming its major challenge, which is faking of insurance certificates.

Indeed, despite the launch of the Nigerian Insurance Industry Data Base targeted at checkmating the activities of fakers of Third Party Motor Insurance certificate, insurers cannot boast of having issued 50 per cent of all the Motor insurance certificates paraded by motorists.

The fakers are still taking upper hand in the business.

Just late last year, members of National Union of Road Transport workers (NURTW), in one of the northern states boldly announced that in order to cut down on the cost of maintaining their commercial vehicles in terms of licenses, insurance and other statutory documents issued by government, they would no longer obtain their insurance certificates from their states where the government is collaborating with insurers to ensure that motorists obtain their insurance certificates from genuine operators through payment of the right official insurance charges.

They said they would go to the neighboring states where they could pay N1000 to fakers instead of N5000 charged by the genuine insurers.
This is still happening even in states where the NIID has been declared to be a huge success.

This has spelt the need for the commission to gird itself and relaunch the initiative to put new strategies in place and block all loopholes through which insurance premium drip off genuine insurers’ vault.

Fake Certificate Masterminds

The insurers have been struggling to ensure that the NIID is extended to the various ports in the court to check the menace of fake marine insurance certificate masterminds but are yet to achieve breakthrough, insurance industry observers said these are issues the second phase re-launch would address. Furthermore, industry observers said the issue of compulsory insurance implementation is one major area the operators have not achieved even 10 percent penetration especially insurance of public buildings and buildings under construction which is one of the compulsory insurances the initiative has set out to enforce because of cases of building collapses in the country.

In the view of the industry stakeholders, the launch of the second phase of the MDRI initiative would sensitise both government and the insuring public to have positive view on insurance and will to a reasonable extent help the industry to win public acceptance.

But despite these fallow ground yet to be achieved through the phase first, stake holders said NAICOM can conveniently boast of having achieved a lot through the initiative.

Assessment of Success

According to the Managing Director Riskguard-Africa Nigeria Limited, Yemi Soladoye, who was the NAICOM consultant on the MDRI, the first phase of the initiative recorded about 75 per cent success,
Soladoye, told THISDAY that the initiative was a huge success and had stood as a turning point in the industry.

He added that with the initiative, operators, regulators, service providers and the government, had realised that there was something going on in the industry.

He said prior to the introduction of the MDRI, operators were leading the industry, but with the initiative, the fear of the regulator had become the beginning of wisdom.

“MDRI is also a turning point because it is from that stage we saw the regulator leading the market. There is a united focus for all of us. Whether you adopt it or not, we all know that there is a project on ground and there is a destination to reach and there is a direction as to the way we can go for us to secure increased penetration for insurance business in this country.

“The initiative is a watershed in the history of the industry and it is also an evergreen thing. You cannot wish it away, as it has brought about many developments. When you read the strategy document, you would see that micro-insurance is part of the area that was recommended as where the industry will get development”, he stated.

Also, the former Commissioner for Insurance, Mr Fola Daniel who is the father and author of the initiative, in a recent interview with THISDAY on the success of the first phase of the initiative which he presided over said, “The trillion-naira goal remains achievable with the rapid fueling of the economy, focus on agriculture sector, the exploration of hitherto mineral resources and a growing population, the attainment of industry trillion naira will be a reality rather than a mirage.”

“We note that a lot has been done in the area of positive shift from N260 billion where we were before the MDRI launch to present figure, but the trillion-naira Mark is yet to be achieved.

On what can be done to achieve the all-important mark, he said
“I believe that the regulator and all the industry players are more determined than before to take the industry to the trillion-naira size and is doable if all the stakeholders play their expected roles diligently. The potential of the Nigerian insurance market are phenomenal, if viewed from the demography, economic resources, and other measurable parameters. The fundamentals are strong to support sustainable growth of the industry”, Daniel stated.

In the early years of the initiative, Daniel as the commissioner for Insurance had charged insurance intermediaries on the success of the initiative.

According to him, the success of the various strategies adopted by NAICOM to ensure insurance penetration in Nigeria especially, through the MDRI hinges on insurance intermediaries such as insurance brokers and agent.

He stated this while reading his address at a workshop on “Downscaling of MDRI Implementation” to the insurance intermediaries in Lagos. 
According to him, the success of the strategies would depend on the cooperation and support of all stakeholders, stressing that NAICOM does not expect less from all concerned.

“I believe insurance brokers and the agency system that we are about to revive have a crucial role to play in ensuring the success of the MDRI programme given their business network. They should be able to utilise the large size of their network spread across the country, to promote the good image of the industry and deepen insurance penetration,” he said.

It then behooves the brokers to represent the industry effectively through prompt payment of claims and sustenance of high ethical standard. Insurance brokers must also strive to add greater value to the public. Insurance consumers have become more demanding and as such, brokers must be more proactive in meeting their changing needs.

Industry analysts said there was no doubt that the MDRI had opened doors of advancement to the industry.

According to them developments seen in the industry today such as micro insurance in form of Takaful insurance, digital insurance marketing, insurance web aggregators among others are all foundations laid by the MDRI initiative.

They also believe launch and implementation of the second phase would bring the industry to brighter lime light.