Abuja — Commissioner for Insurance/Chief Executive Officer, National Insurance Commission (NAICOM), Mr. Fola Daniel said Thursday that it had resolved to evoke sections of the Insurance Act of 2003 to make government more committed to premium obligations as well as pay large amount of debts it owed the insurance industry.
He said the 'No Premium No Cover' rule would henceforth be implemented to save the industry from collapse. It also emerged that a good number of public properties may not have been insured.
Speaking to journalists in Abuja at the opening of a sensitisation workshop on the implementation of "No Premium No Cover" rule for insurance stakeholders, the NAICOM boss said delayed or unpaid insurance premium had reached an alarming level and threatened to drive the industry into extinction if the trend was not reversed.
He said: "The biggest customer of the insurance industry is the government. So the bulk of the debt resides with the government. One of the efforts to ensure government meets up to their debts is this gathering. The insurance officers, would be adequately informed of the dangers, risks and implications of non-payment of premiums to the effect that let's not pretend that we have cover: if we don't pay the premium, there would be no cover."
He explained that the 'No Premium, No Cover' policy was not a new regulation as it was already contained in Section 50 (1) of the Act.
That portion of the Act clarified that "The receipts of an insurance premium shall be a condition precedent to a valid contract of insurance and there shall be no cover in respect of an insurance risk unless the premium is paid in advance."
The commissioner said NAICOM as the industry regulator, has no alternative than to implement the law in order to save the industry from mounting debt and levity on the part of government.
According to Daniel, annually insurance companies make huge provisions for outstanding premiums in their books but delays or non-payment of premiums invariably affect their ability to make profit, pay dividends to shareholders and attract investment to enable growth.
"This avoidable situation is unhealthy and dangerous to the industry and it is time to put a stop to it, "he said.
He noted that even where such provisions were made, payment of premiums to insurance companies were either delayed for months or diverted to meet other needs by ministries, departments and agencies of government (MDAs) in breach of the insurance Act 2003.
He lamented that current budgetary vote for the insurance of government assets and properties were either inadequate or provided at all.
He said: "I suspect that some government properties may not have been insured.
What is my evidence? I have seen a few number of properties burnt down and the relics are there for two, three years-why?
"If there's an insurance cover in place, the process of settling these claims and rebuilding should start immediately."