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Nigerian Insurance Laws Outdated, Says House
*Emefiele calls for upward review of medical insurance
Udora Orizu in Abuja
The House of Representatives Committee on Insurance and Actuarial Services, yesterday said that the country’s insurance laws were outdated and completely out of touch with the realities of the modern times.
Chairman of the Committee, Hon. Darlington Nwokocha who made the disclosure at a two-day Public Hearing on Insurance amendment bill, 2020, said the lawmakers will amend the extant pieces of legislation.
Nwokocha said that the Third Party Insurance Act of 1945 still has fines prescribed in colonial pounds sterlings instead of Naira.
He said, “Having taken time to study the insurance Act 2003 and other pieces of insurance legislation in Nigeria, we can confirm that much of the provisions of the insurance laws are out of tune with modern realities. In particular, the sanctions regime is weak. In some cases, as with the Motor Vehicle (Third Party Insurance) Act 1945, the prescribed fines are stated in pound sterling instead of naira.
“Also, the amounts stated as fines in the various laws are grossly insufficient. Some provisions prescribed something as low as N2 and N5 respectively. In the modern time, the philosophy of penal punishment advocates effective and dissuasive sanctions. We’ll consolidate it with other existing insurance laws, introducing changes that can make the insurance sector become a real growth driver for the Nigerian economy.”
Speaking further, he said that public hearing was necessary to elicits the views and inputs of Nigerians on the amendments.
The lawmaker opined that the youths can make a living if the insurance was repositioned.
According to him, ‘’The essence of this public hearing is to collect and collate all sheds of opinion to ensure that the outcome represents the views of all stakeholders. We have invited all relevant stakeholders and we hope that everyone is here for this important deliberation. We are going to do our best to ensure that this objective is attained.
“Having said that, I want to observe that the Insurance sector in Nigeria has come a long way. Despite the glaring poor performance relative to other jurisdictions, we are confident that given a robust regulatory and institutional framework, the insurance sector in Nigeria will soon emerge as one of the major drivers of the Nigerian economy.
“Furthermore, the extant insurance laws are written in a prescriptive form. Following the global economic crises of 2009, the financial regulatory world has moved toward risk-based supervision. Most jurisdictions have successfully gone risk-based. Even in Nigeria, all the sister financial sector regulatory bodies, including CBN, NDIC and Pencom have all implemented risk-based supervision.
“The structure of the extant insurance regulatory framework has made it impossible for Nigeria to implement risk-based supervision in the insurance sector as required. To move with the rest of the world, the time has come to provide for risk-based supervision in our insurance laws.
“The challenges of public confidence must be addressed. The regular courts appear to be overcrowded and do not seem to have the time to attend to insurance cases which ought to be treated with dispatch. Besides, the Complaint Bureau established under the provisions of Section 8 of the Insurance Act 2003, is grossly inefficient and indeed incapable of addressing the dispute settlement needs of the emerging insurance sector.
“At the same time, the insurance regulatory personnel require structured training to be effective with work of regulation and supervision of the insurance sector in Nigeria, matching their counterparts in other jurisdictions. This underscores the need for a proper regulatory academy that is devoted to training and retraining regulatory and supervisory officers as is the case with CBN and NDIC. Relatedly, the regulator should have its operations automated to remove unnecessary bottlenecks in its licensing and approval process.
Earlier in his welcome address, Speaker of the House, Hon. Femi Gbajabiamila said it was necessary to rejig the insurance laws in Nigeria.”
According to him, “We begin this difficult but rewarding task of conducting Public Hearing on the Insurance Bill 2020. I understand that the broad objective of this Bill is to amend the Insurance Act 2003 and consolidate it with other extant insurance legislation in Nigeria. This process is expected to deliver a robust regulatory framework that will change the face of insurance business in Nigeria and position the insurance sector as a major growth driver for our national economy.
“This would be highly desirable, especially in light of our rapidly contracting national economy. As you are aware, in the current year, the Nigerian economy has been badly affected by the COVID 19 pandemic. Government is currently battling, through various economic intervention programs to bring the economy back to its feet. Although we are optimistic of emerging stronger from the present recession, current efforts are yielding only limited success. Therefore, both the federal and state governments, at this time, should be interested in virgin sectors that can be explored to national economic advantage. One of such sectors is the insurance sector”, he said.
Contributing to the issue, the Governor of Central Bank of Nigeria, Godwin Emefiele who was represented by the Director of Legal Services, Mr Adedeji Lawal called for the upward review of medical insurance.
He said: “Some sections are quite vague particularly in licensing of insurance companies and there’s need for upward review of medical insurance from 100k to 500. Share capital should be left with NAICOM and sanctions should be minimum and not maximum”.
The hearing was attented by major stakeholders which included apex insurance regulator, NAICOM, NIA, CBN, TUC, NLC, Budget office, Ministry of Finance, AGF, AuGF, Civil Defence Corps NSCDC.