12 March 2014, Lagos – Group Managing Director of Industrial and General Insurance Plc, IGI, Mr. Rotimi Fashola has said that many government ministries and agencies no longer insure their assets since the introduction of the ‘no premium, no cover’ policy by the National Insurance Commission, NAICOM.
Fashola said, “It is a fact that many governmental ministries and agencies are no longer insuring their assets because of the delay experienced in the approval of their budget.”
Fashola said that government and its agencies have been paying lip service to the importance and benefits of insurance, without serious patronage and support, adding, “There is hardly sufficient budget provision for payment of insurance premium by government and its agencies. Therefore, when insurance services are patronised, payment of the premium becomes an issue, a clear negation of the provisions of the law on ‘no premium, no cover’. Some government parastatals or enterprises are funded without allocation for insurance. Many insurance policies contracted by the MDAs in the past were not renewed, thus leaving the assets exposed to risk, damage and losses without insurance protection.
“Many of the parastatals are no longer contracting insurance, certainly in breach of some of the compulsory insurances, because of the government budget system. It is my considered opinion that exemption be granted to Government in the strict application of Section 50, ‘no premium, no cover’. The reason is that government debt is a statutory, sovereign debt which will be paid by succeeding administration” Fashola stated.
While decrying other unprofitable regulations in the insurance sector, Fashola said that the current law makes any foreign investment an inadmissible asset, while in the same vein the law encourages foreigners to invest in the insurance industry. This position should be reviewed, he said.
On brokers’ yearly renewal of license, Fashola said that it is onerous for brokers to be renewing their licences yearly as advanced countries have dispensed with such practices, adding “It is high time we embraced activities that will deepen insurance in Nigeria.”
On investment in properties, he said that the Insurance Act 2003 pegs investment in landed properties at 25 per cent and 35 per cent for general business and life business respectively. “This needs to be reviewed in the face of the crash in the quoted Stock market which made some insurance companies lose heavy investment in the past.”