Rate cutting: NAICOM to sanction erring insurance companies
The National Insurance Commission (NAICOM) has said it is considering a regulatory on insurance premium rate cutting among insurance companies in 2018.
The Commission said several industry players have approached it to wade into the matter as it is negatively impacting the insurance industry in Nigeria.
The Commissioner for Insurance, and CEO National Insurance Commission (NAICOM) Alh. Mohammed Kari, stated this at the weekend in Kaduna during the 2017 Annual Seminar for Insurance Correspondents organised by the Commission.
Alk. Kari said the regulatory action on rate cutting will begin to happen as soon as 2018 adding that insurance companies must charge sustainable premiums on all insurance policies.
Operators are begging the Commission to assist them in controlling rate cutting he said adding that the Commission is considering action on that.
From NAICOM investigations, some insurance companies are charging as low as 1 per cent and some 1.5 per cent or 2 per cent on comprehensive motor insurance rather than the 10 per cent recommended by the industry. Some other companies offer up 5 per cent and some 3 per cent premium on comprehensive auto insurance.
He noted that a lot of emphasis is now placed on premium generation rather than innovation.
He faulted some operators who claimed that there is no such thing as rate cutting in the industry, adding that the leadership of the Nigerian Insurers Association (NIA) had approached the commission to intervene in the crisis currently bedevilling rating of insurance risks.
Rather cutting according to industry experts jeopardizes the capital of operators to pay claim and also leaves the market shallow as valuable capital is shut out.
Earlier at a courtesy call to the Kaduna state governor, during the event, NAICOM solicited partnership with Kaduna State government on implementation of the compulsory insurances.
He noted that such partnership will allow the commission to set up its branch in Kaduna, at a time it is considering to open more new branches across the country.
He stated that the commission launched the Market Development and Restructuring Initiative (MDRI) in 2009 and that the commission is commencing the second phase of the initiative, which is the enforcement of the compulsory insurances across the federation.