The National Insurance Commission ( NAICOM), barely four years after the implementation of the ‘no premium no cover’ policy in Nigerian insurance industry, said it has in its overall effect increased international attractiveness of the industry.
The Deputy Commissioner for insurance, Finance and Administration, George Onekhena, who stated this at the 25th anniversary celebration of Boff & Company Insurance Brokers Limited in Lagos, said the commission, is interested in seeing the ‘no premium no cover’ policy work better in the industry.
He said the effectiveness and beauty of the policy has attracted the attention of Nigerian neighbours most of whom now copy the policy and other policies enforced by the commission to improve the performance of their own insurance industry.
The policy, he said, among other things, has solved the problem of knowing premium income in cash of insurance firms in Nigeria by the commission.
According to him, it has also standardised the operations of insurance firms in the country and has built public confidence in the industry.
NAICOM had in January, 2013 announced its intention to implement the ‘no premium no cover’ policy as enshrined in 2003 insurance act.
With the policy in place, insurance underwriters only grant cover to insurance buyers who paid for their policy contract while denying cover to any insured who fails to back up his policy contract with payment of premium.
What this means is that if anybody buys insurance from any insurance firm, signed all the necessary documents for insurance cover of the business but fails to pay the premium before the occurrence of risk, the person is not entitled to any claim or compensation by the insurance firm.
This is a major shift from what obtained in the industry before 2013 in which most insurance contracts were done on credit but as soon as claim comes, the insured will run and pay his premium so as to receive claims.
In some cases, the insured, will sign the contract and wait until risk occurs, he will then approach the insurance company and ask for deduction of the amount of money he supposed to pay as premium and be given the balance as claims.
This almost stifled the insurance industry to death and had made it difficult for the regulator to check the account books of the operating firms as well as to determine their financial strength, until January 2013, when NAICOM insisted that it was tired of seeing bad debts in the books of insurance firms adding that effect from January 1, 2913 every insurance business transaction in Nigeria should be strictly on cash and carry bases .This enthroned the regime of the no premium no cover in the industry.