Operators Advocate Postponement of New Rates for Compulsory Insurances
Operators in the insurance industry have appealed to the National Insurance Commission, NAICOM, to defer implementation of the reviewed rates on compulsory insurances by one year to enable the insuring public to be adequately sensitized.
Some operators who spoke to Vanguard said that consumers have already drawn up their insurance budget for this year with the old rates and it will be difficult to alter it. The stakeholders ask for time to sensitize clients on the new rates before the next renewal period.
Former President of the Nigerian Council of Registered Insurance Brokers, NCRIB, Mrs. Laide Osijo, said that though the new rating on compulsory insurances will benefit the industry; however, implementation should be deferred so that clients and customers will be adequately sensitized.
Osijo said, “Most Federal Government Agencies, Parastatals, and even corporate organizations have already made their budget for this year. Hence it could be difficult, especially for government, to pay the new rates. My advice to NAICOM is that we should be given some time to carry out enough sensitization to the public, corporate outfits, clients and even to government so that implementation will be successful.”
An insurance marketing executive, who spoke on the condition of anonymity said, “There has been little or no enforcement of the compulsory insurances, therefore, implementation of the new rate would have been better if enforcement had been in full swing prior to now.
“If enforcement had been on, when you tell consumers that there is a reviewed rate, they will know and when they refuse to insure, they will be penalized. However, with no enforcement, premium income could reduce and after observing situation for some time, underwriters might be tempted to go back to status quo,” he said.
On impact of the new rates on the industry, Osijo said, “It is a good step in the right direction for the industry because most risks are not priced with commensurate rates; consequently, underwriters find it difficult to pay claims at the end of the day.
“The claims ratio in the industry is so high that the industry needed to do something about it. With the new rating, all the unethical practices by operators will come to an end, because anybody that errs will be sanctioned.”
Recall that NAICOM penultimate week released approved rates for compulsory insurances to the operators. The regulator said the move is part of efforts to curb the increasing challenge of rating in the industry and charged every operator to be guided by the rates in their various transactions. NAICOM stated that going forward, it shall strictly monitor and enforce compliance.