Outstanding premium expected from brokers; agents; sundry debtors and others amounted to N92.98 billion in 2016, according to the annual balance sheet of insurance companies published by the National Insurance Commission (NAICOM).
Non-life operators were owed N84.48 billion and Life operators N8.58 billion. A breakdown of the figures revealed that agents and brokers owed N1.96 billion; sundry debtors, N15.29 billion and others N75.81 billion.
The Managing Director of one of the leading insurance companies, said the unpaid premiums, especially those of agents and brokers were businesses transacted closed to the end of the financial year of companies, hence must reflect in their accounts.
The issue of outstanding premium was what gave birth to the ‘No Premium No Cover Policy’, which enables insurers to grant cover to policyholders who pay premium. But, this policy seemed to be gradually losing its steam due to unhealthy competitions and insurers quests to get businesses.
According to the former Commissioner for Insurance Fola Daniel, the issue of outstanding premium, almost led to death of the insurance industry, stressing that insurance was one of the few products that were bought on credit.
“People are taking insurance and owing insurance firms infinitely. We have a situation where an entity is insured for four years and it hasn’t paid premiums at all. So if an insurance company is not receiving premiums, it will not have money to pay claims.
‘‘Insurance provides mechanism to pool premiums from different persons in order to meet liabilities and claims. Money therefore becomes available to grow the portfolio, run administrative duties and management expenses, but when this money is not paid, the insurance industry is incapacitated and that was where we found ourselves, which compelled us to invoke the “No Premium No Cover” provision of Section 50 of the Insurance Act 2003.
We don’t enact law because NAICOM is not a parliament, but we implement policies as regulators.
“The “No Premium No Cover Policy” predated the 2003 Insurance Act. The law was there, but it was not being implemented resulting in almost the death of the insurance industry,” he said.