The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has called for the upward review of medical insurance to N500, 000 as against the present N100,000.
Emefiele made the call at a two-day Public Hearing on the Insurance Act Amendment Bill, 2020 organized by the House of Representatives Committee on Insurance and Actuarial Services in Abuja on Monday.
Represented by CBN Director of Legal Services, Adedeji Lawal, Governor of the apex bank said some sections of the legislation were quite vague particularly in-licensing of insurance companies.
He said: “Share capital should be left with the National Insurance Commission (NAICOM) and sanctions should be minimum and not maximum”.
In its presentation, the National Insurance Association (NIA) demanded that Section 16(1) and (2) of NAICOM Act 1997 should be amended.
The section provides that resources of the Commission shall comprise: “One percent levy on every insurance institution; in the case of an insurer or a reinsurer, on its gross premium income”.
However, the Association proposed that the provision should be made in the Bill that: “the 1% levy should be on the net premium income and not gross premium income taking into consideration intermediaries commission and reinsurance”.
Chairman of the Committee, Darlington Nwokocha declared that the country’s insurance laws were outdated and completely out of touch with the realities of modern times.
Citing an instance, Nwokoocha said that the Third Party Insurance Act of 1945 still has fines prescribed in colonial pounds sterlings instead of Naira.
Nwokocha 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 modern times, 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.”
Earlier in his opening remarks, the Speaker of the House of Representatives, Femi Gbajabiamila said it was necessary to review the insurance laws in Nigeria to realize the economic benefits.
“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 the 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. The 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.
Essentially, Some of the proposed amendments to be made on existing insurance laws included stamping out of fake insurance through reform of Motor Vehicles (Third Party) Insurance business and Marine Insurance business; having a robust framework for the enforcement of compulsory insurance; having an enduring framework for the implementation of risk-based supervision; creating suitable a mechanism for the effective resolution of insurance dispute; having a mechanism for providing robust training for regulatory staff; restructuring the ECOWAS Brown Card Scheme and improving claims settlement procedure by reducing timeline and the extent of documentation required by the insurers