Pros and Cons of MDRI

It is now six years since the insurance industry launched its Market Development and Restructuring Initiative aimed at popularising insurance in Nigeria, Ebere Nwoji highlights its successes and failures

The insurance industry’s Market Development and Restructuring Initiative(MDRI) is six years old. A review of its performance within the period shows a mixture of successes and failures. MDRI is a medium term plan of the industry mainly targeted at growing the premium income of insurance industry from the initial low level of N164 .50billion in 2008 to N 1 trillion between 2009 and 2012 through deepening of insurance penetration in Nigeria.

A brainchild of the industry regulator, the National Insurance Commission (NAICOM) ,the

initiative was designed in three phases , the first phase spanned between 2009 and 2012 with the objective of transforming the industry to a trillion Naira market through the enforcement of the following compulsory insurances:

Builders Liability insurance under the Insurance Act 2003 and Lagos State Building Control Law 2010, Occupiers Liability insurance under the Insurance Act 2003 and Lagos State Law, Employers Liability insurance (Group Life) under the Pension Reform Act 2004 ,

Employers Liability under the Workmen’s Compensation Act 1987, Healthcare Professional Indemnity under the National Health Insurance Scheme(NHIS )Act

1999,and Motor 3rd Party Liability insurance under the Insurance Act 2003.

Other objectives of MDRI

In addition to increasing the premium income of the industry through the enforcement of the aforementioned compulsory insurances, MDRI focuses on four key issues targeted at growing the industry.These are enforcement of compulsory insurance products in Nigeria, sanitisation and modernisation of insurance agency system,wiping-out of fake insurance institutions -., introduction of Risk-based Supervision as well as building consumer trust on the industry.

The initiative is expected to through the achievement of the above set objectives raise the contribution of the industry to the GDP of the economy from 0.72 percent to 4 percent as well as reduce insurance gap which was as wide as 94 percent before the introduction of the initiative to at least 70 percent.

NAICOm as the initiator of the project is expected to through successful implementation of the initiative earn direct revenue of N800. million and Indirect project revenue of N12 billion through levies. Also government parastatal like the fire service, which services the industry in the area of reducing occurrence of fire risk which has become major source of claims to the industry is expected to earn revenue in form of maintenance fund from the initiative.

Implementation

The MDRI unlike most other beautiful initiatives of government that end in written document carefully stored in the shelf of government agency involved, witnessed prompt implementation efforts by the regulator.

The implementation commenced in August 2009 with gathering together of insurance chief executives in the country. A month later,a workshop on the implementation was organised.

This was followed by the sensitisation through public launch of the initiative in the six geopolitical zones of country and few other cities. Specifically MDRI was launched Ibadan, Kano, Portharcourt, Enugu, Sokoto, Maiduguri, Abuja and Lagos.

During the launch, insurance industry operators embarked on road shows with their official vehicles in major parts of the cites where the initiative was launched. NAICOM as the regulator took it upon itself to market the initiative in every insurance forum even outside the country. The regulator even rode on the initiative as a vehicle to carry insurance message to various monarchs in the country, in Calabar, Akwa Ibom,Abeokuta among the others.

Assessment

Though on the surface, assessment of the initiative’s performance and achievement of its set objectives might portray a picture of failure in meeting the N1 trillion mark,as since then,the industry’s premium is still far from hitting the N 1 trillion mark, a critical look at the activities in the industry and attitude of Nigerians towards insurance clearly shows that the initiative has gone far in the long walk of transforming the industry to a trillion Naira market.

Indeed, positive changes noticed in the industry today especially in the area of patronage of the industry by the hitherto hostile Nigerians is the outcome of implementation of the MDRI initiative.

Suffice it to say that although the industry has not hit the trillion Naira market target,MDRI has obviously popularsed insurance in Nigeria while the reforms emanating from the implementation has reshape the perception of Nigerians

towards insurance.

Achievements

The initiative through the number of fresh graduates and other youths it has pushed into insurance market with their persuasive and convincing words have enlightened Nigerians at all levels on the benefits of insurance.

Today, many Nigerians prefer to do their long term savings through life insurance. Many now buy insurance polices such as education plan for their children.

Also, different professional groups like Nigerian medical Association, and its other affiliated groups even Nigerian union of Journalists are eager to buy group life insurance, group and personal accident policies among others for their members.

These groups before now prefer to have their money in their pockets instead of buying insurance for the unknown.

Through MDRI, Nigeria has joined the rest of the world in enjoying the benefits of retail insurance, before the launch of the initiative, insurance was the preserve of the rich and government.

Hardly do individuals think about buying insurance, the industry operators themselves were busy knocking heads together in pursuit of government account, which was the only viable business available.

But when the operators keyed into the MDRI vision, many started jettisoning government business having found better alternative in retail business.

For instance, the Group Managing Director of Mutual Benefit Assurance, Mr. AKin Ogunbiyi said since his firm discovered quantum of premium in retail insurance, he has no business chasing government business any more.

According to him, Mutual Benefit now sees retail insurance as its cash cow and has created