As the nation waits anxiously for the inauguration of a new president on Monday, May 29, 2023, there is palpable concern in the insurance industry that President Muhammadu Buhari may not assent to the long-awaited Consolidated Insurance Bill 2020 before he leaves office.
The exclusion of the Consolidated Insurance Bill 2020 from the list of 15 bills passed last week to President Muhammadu Buhari for assent, less than one week to the end of his administration means that the Insurance Bill might not be passed into law in this dispensation.
If it happens, it will be quite unfortunate that despite all efforts put into coming up with the bill by the various arms and industry stakeholders, will just go down the drain.
Although this may not be new judging from the fact that the same scenario happened to the Revised Insurance Bill in 2014 under the administration of the ex-President Goodluck Jonathan.
However, the implication of non-passage into law of the Consolidated Insurance Bill 2020 is grave because the sector will need to embark on another fresh process with the new set of lawmakers making up the 10th National Assembly members.
And as it stands, it seems there is no light at the end of the tunnel for the bill, unless a miracle, which sometimes happens, takes place before May 29.
Although insurance operators had high hopes that the bill would definitely be signed into law against all odds, events in the last few days may have dashed such hope.
This is because the industry operators and stakeholders who were hopeful that the Muhammadu Buhari-led administration will sign the long-expected bill into law before leaving office, has come to realise that it is now mission impossible, less than 7 days to the inauguration of a new administration.
This has remained a source of concern for experts who strongly believed that the bill, if signed into law, will better the lot of the insurance industry and position it for sustainable growth.
Although the industry has in recent time shown resilience in business expansion and growth, looking at the end of fourth quarter 2022, there are more that could be done with the bill becoming an Act.
The industry, for the record, reported significant improvement on various key indices, including gross premium, claims payment, total assets, improved market regulation, awareness and consumer confidence in the 4th quarter of 2022.
According to the National Insurance Commission (NAICOM) fourth quarter 2022 report, the insurance industry recorded gross premium of N726.2 billion, representing a growth of 36.3 percent over the same quarter of the preceding year, while it paid claims worth N318.2 billion in the same period, representing a 31.2 per cent growth.
Though the sector was able to record these milestones, it is still plagued by a lot of challenges which experts said could be addressed if the Insurance Act 2003 is amended.
Insurance Act 2003: Need for Amendment
The 20-year-old Insurance Act 2003 deserves amendment. To market observers, it is true that there is no perfect law in the world but the Act needs to be amended to align with current realities, not only in the country but also in the international market.
The call for review of the Insurance Act 2003 dated back to 2008 following a period of economic recession which significantly presented among others, the need for amendment.
Interestingly, within the period the Federal Government through the Federal Ministry of Finance set up a Professor Joe Irukwu-led committee to review all insurance laws and as well as pursue amendment of stale laws that culminated in the 2008 Insurance Bill. Unfortunately, this bill did not see the light of the day.
Similarly, in 2016, Kemi Adeosun, then Minister for Finance inaugurated an insurance review committee chaired by Dr. Omogbai Omo-Ebo, which was saddled with the responsibility of reviewing all existing insurance laws, market problems and making recommendations that will form the basis for the amendment draft for Insurance Bill 2018. This bill was not signed into law.
Unarguably, the Consolidated Insurance Bill 2020, which has remained source of hope for the industry, is still treading the same path of earlier ones. History has repeated itself again. Thus, for the past 20 years, the regulatory law of the risk-bearing industry has not been successfully reviewed nor amended.
No doubt, so much time, energy and resources were put into the review exercise done for the aborted 2008, 2016, 2018 and now 2020 bills.
For stakeholders, this does not augur well for the industry, judging from the fact that the sister industry- pension sector- successfully reviewed its 2004 Pension Reforms Act in 2014 and it’s preparing for another review that may be done this year or in 2024.
The problem is the bureaucracy in government.
Consolidated Insurance Bill 2020: Issues to Address
The bill seeks to address many of the industry headwinds by rectifying shortcomings of the Insurance Act 2003.
One of the improvements would be in the area of recapitalisation. The bill has settled the definition of capital in the insurance domain, building on the framework in the Finance Act 2021, ending the incongruity between operators and regulators in the sector, which previously led to the cancellation of several proposed recapitalisation attempts by the regulator.
It’s worthy of note that the last recapitalisation exercise in the industry took place in 2007 while subsequent attempts to carry out another round of recapitalisation has proved abortive.
The bill will also introduce harsher penalties for fake insurance certificate perpetrators, improve public trust and reintroducing the risk-based supervision capital model to align the industry with international best practices.
Insurance industry Effort
The immediate past Chairman of the Nigerian Insurers Association (NIA), Mr Ganiyu Musa, had disclosed last year that insurers were closely monitoring developments on the Consolidated Insurance Bill 2020 and will continue to pursue same doggedly until it is finally passed into law.
NIA, he said, participated in all the processes thus far and will continue to monitor developments in respect of the bill as it receives legislative attention, adding that the bill, if passed into law, is expected to have positive impact on the insurance space in Nigeria and align it with global best practices.
“We must acknowledge the co-operation received from the Speaker, Federal House of Representatives, Rt. Hon. Femi Gbajabiamila; Chairman and members of the House Committee on Insurance and Actuarial Matters, National Insurance Commission (NAICOM) and other stakeholders in the journey thus far.
“We remain cautiously optimistic that the Bill will be signed into law before the tenure of the 9th National Assembly lapses.”
Benefits of The Bill
Experts in the industry are excited that provisions of the Bill in consideration when finally passed into law will have positive impact on the country’s insurance space, strengthen the weaknesses of the Insurance Act 2003 and align with global best practices.
According to the President, Chartered Insurance Institute of Nigeria (CIIN), Edwin Igbiti, the Insurance Bill translation to an Act, would be the best legacy President Muhammadu Buhari’s administration would bequeath the insurance industry.
He implored all insurance practitioners to come together and push for the signing of the bill in law.
Implication of Exclusion of the Bill
The exclusion of the Consolidated Insurance Bill from the other bills passed for presidential assent means that the industry will wait a while before the next administration could sign it into law, that is, if it gets to the table of the incoming President.
This delay may give room for weak capitalisation of the industry, unabated weaknesses of the moribund Insurance Act 2003. At the international level, the risk bearing industry may not be able to play a leading role. Thus, the urgent need to strengthen the laws of the industry which the Consolidated Insurance Bill 2020 would have done if signed into law at such a time as this.
Decrying the exclusion of the bill amongst the 15 bills passed to President Muhammadu Buhari for an assent before leaving office, Chairman of Session, Chartered Insurance Institute of Nigeria (CIIN) Year 2023 Fellows’ Event, Mr. Dan Okehi, called on Fellows in the insurance industry to arise to their responsibilities as it is their obligation to collaborate with NAICOM in ensuring that the bill becomes an Act.
Okehi stated that Fellows should note that the burden of growth and development of the sector rests on their shoulders as the industry’s policy makers.
On his part, a past President of the CIIN, Olusola Ladipo-Ajayi, said: “There is supposed to be a synergy between the regulatory body and operators in the industry. The industry doesn’t have much visibility in the public space. This means we are not in government’s contemplation. The way we operate the industry has not given us visibility. It should be our priority.”
Corroborating, the Hon. Lanre Laoshe, an insurance professional and former member of the House of Representatives, explained that, with the exclusion of the bill among the 15 passed to the President for assent, it means that the process start again from the beginning when NASS resumes on June 4th, 2023.
“If they really want to change their law, let them work or why didn’t the bill go far? Some may not want the bill to get there”, he said.
Also, the Managing Director, Peninscope Professional Warranty Limited, Mr. Taiye Adediji pointed out that such omission will hinder development in the industry, cut the time frame that would enable the players acclimatise with the new law if signed into law now in terms of developing consciousness about it while delaying it has put the players on suspense.
Similarly, the Managing Director, Risk Sift Consultant Limited, Mrs, Janet Omoniyi, said the industry cannot act on it until the president signs the bill into law.
She said: “It means we will continue to use the obsolete law. The industry will have to wait till a new set of NASS comes onboard, brings it up and works on it, then sends it to the President. Something must have gone wrong along the line. Maybe, it still needs to be fine-tuned.”
Also, the Vice President, Association of Registered Insurance Agents of Nigeria (ARIAN), Mr Jegede Kehinde, regretted that not signing the bill will hinder insurance penetration which is yet to reach the 0.5 percent mark in Nigeria. According to him, a bill that is acceptable to all players will promote sense of belonging among insurers and bring about healthy competition.
“It means NAICOM needs to be empowered. There are a lot of innovations it wants to bring about in the industry.”
In the same vein, the President, Independent Shareholders Association of Nigeria (ISAN), Mr. Moses Igbrude, stated that, “when we visited NAICOM last week, the Commissioner for lnsurance, Mr. Sunday Thomas, promised that the Commission has done some work to enhance the insurance industry. If the industry bill does not get the assent of the present administration, the question is – ls it that the bill is not ready? If yes, why is it not ready? It means there will be delay. The bill will start all over again. Its supposed effect would be postponed. It means it will further delay the enhancement of the industry.”
Way Forward
Speaking on the way forward, Ladipo-Ajayi said all contending issues should be looked into. On behalf of the industry, he stressed that, there must be someone monitoring the movement of the bill. At every stage, somebody must be on ground, he noted.
Similarly, Laoshe noted that the industry should go back to the drawing board and find out why the bill didn’t go far.
In the same vein, Adediji stated that, “there is need to find out the reason why the bill has not got to the table of the president for his assent. Is it human error or the content of the law? Was it a mistake – intentional or sabotage? Is there another opportunity for the bill to get to President Buhari before he leaves office? These are some of the things the industry regulator and operators should find out. Even though the president has few days left, as long as he is still in the office, there is still hope, if all necessary things are timely done.”
Omoniyi as well suggested there is need for the industry to agree together on how to move the industry forward.
Conclusion
Stakeholders believe it would be unfortunate if by May 29, President Buhari did not give assent to the bill. The industry, they said, might have to start the process all over again.
While market observers expect insurance operators to look inward on the need to have representatives at the National Assembly, they urged them to think seriously about the importance of being proactive.
It would be recalled that it was when Hon. Lanre Laoshe was a member of the House of Representatives that the lnsurance Act 2003 was signed into law. They said there is need for strategic lobbying and resistance against bureaucracy in government.
It is hoped that when the incoming National Assembly kicks off, the lnsurance Bill will receive speedy attention so that it will be among the first set of bills to be signed into law by the incoming administration to enable the industry begin to tap into the opportunities provided by the new law.
