Insurers on war path with state governments over insurance business
On February 22, 2012 · In Business
By ROSEMARY ONUOHA
THE Nigerian Insurers Association, NIA, said it ready to wage war with any state government that has given exclusive rights to unlicensed intermediaries in their states to sell insurance policies. According to the NIA, the only authorised institutions to sell insurance policies are the insurance companies.
Chairman of NIA, Mr. Olusola Ladipo-Ajayi who made this assertion said that the NIA is against the trend where such unlicensed intermediaries monopolise the business of insurance in some states, thereby depriving the real owners of the business of their entitlements.
Ladipo-Ajayi said, “This is something that the NIA is really working at and this one we will give it the last drop of blood in our veins. There are some people who are not licensed intermediaries. They come together and get authority of some state governments and create a monopoly for a handful of insurance companies and in those states they are the only ones that can sell insurance policies. We are against that at NIA.”
The NIA Chairman said that every insurance company licensed by NAICOM to operate must be able to sell her products in any part of Nigeria, stating “All of us are running Nigerian companies. Secondly most of these companies take so much money from the premium that at the best of time the insurance companies at the end of the day get only N2,500 from the N5,000.
There are places where they get less than that because these people will say they have incurred all sorts of expenses and at the end of the day, the insurance companies don’t get much. That is the second reason why we don’t want these people to be involved in the distribution of insurance.”
Ladipo-Ajayi emphasised that anybody who must be involved in the distribution of insurance must be licensed by NAICOM and subject to the control of NAICOM.
“Since these other platforms are not open to every insurance company, NIA cannot support it. Whatever excludes a single member of NIA is excluding NIA. Everybody that subscribes to NIA must have his interest protected by NIA that is why we don’t want these people to be involved again” Ladipo-Ajayi noted.
Commenting on the menace of fake insurance operators in the country, the NIA Chairman lamented that the black market in Nigeria is thriving more than the regular market because it has no obligation. According to him, “They are only collecting money without paying claims and therefore bastardizing the practice of insurance. At the end of the day you will find out that there are more vehicles insured in the black market than we have in the regular market.”
Another issue of concern, according to him, is that of inadequate pricing borne out of competition. “The need to capture as much as possible a larger market share have made operators to be at each others throat coupled with every form of unethical practice both from within and outside the industry,” he noted.
For multiple claims from clients, the NIA Chairman said that they have tried to sort it out manually by saying that if somebody is raising a claim, it should be circulated among members, but it did not workd out fine, stating “And we have had only very few instances where we have taken the benefits of consultations.
In fact in my own experience, I think that there is only one celebrated case that I remember involving a number of companies when they were able to apprehend a man for trying to defraud many companies.”
On the Nigerian Insurance Industry Database, NIID, Ladipo-Ajayi said that the insurance industry is integrating with the Federal Road Safety Corps, FRSC, as well as the police. He said that it is an internet based scheme which is supposed to provide real time online verification module.
“If somebody who is in Badagry, Maiduguri, Akwa-Ibom or even the remotest places is buying an insurance policy; it must be verifiable within a specified period. So it is also a scheme where there must be zero tolerance to failure anything that is captured must be there.
So it will take time to take off the ground otherwise we will be shortchanging ourselves and our members who have sold genuine policies will be missing from the database and it will be counter productive. And we don’t want a system where we will start something and rather than get the result we intend we will now be getting the opposite.
So the NIID will be on stream and in the next few weeks or so, you will see that it is already hitting the streets and running.”
