NAICOM should enforce standard code of ethics for agents, say operators
By Joshua Nse
CHIEFTAINS of the nationÕs insurance sector have appealed to the National Insurance Commission (NAICOM) to put in place stringent measures to regulate Insurance Agency system as part of steps aimed at deepening insurance awareness through the market development restructuring initiative (MDRI).
Apparently worried by the activities of unscrupulous agents in the past that had brought bad image to the industry, operators said the Commission should not only sanitise the system but standardise code of conduct for the agents with a view to bringing credibility to the system.
NAICOM recently launched the market initiative with the Insurance Agency System as an area of focus designed to create about 250,000 jobs through the agency network.
Industry chieftain who spoke to The Guardian commended the Commissioner for Insurance, Fola Daniel, for his bold initiatives to reposition the insurance sector to provide assurances necessary for the conduct of economic activities in the country.
The Agency system, according to him, is a veritable area in the insurance business chain, but due to weak regulatory measures, it has brought bad image to the insurance industry. Therefore, what the regulatory agency need to do is to put up strong regulatory standard and code of ethics for the agents.
He explained: ÒPrior to 1961 when the first piece of insurance legislation came into force in Nigeria, insurance business was a free-for-all affair. Some dubious investors who had set up insurance companies saw the business as a means to make quick money for themselves.Ó
ÒThese companies working in concert with some unscrupulous agents found ways to avoid paying valid claim obligations on enforceable insurance contracts. It is widely believed that the activities of these agents and non-insurance professionals, who were in direct contract with the market and were largely not held to any particular code of conduct or standard of training by their principals, gave the industry its ugly face that has continued to hunt operators up till today, the efforts of current day operators to fulfil valid contract obligations, notwithstanding, operators continue to struggle with this image problem in the industry.Ó
According to him, the structure of operations of insurance business today is not significantly different going by the steady growth of intermediaries and their control of over 70 per cent of the total business generated in the Nigerian market. Intermediaries who continue to accept risks on behalf of insurance underwriters are left largely to determine the very essence of the insurance business. With a population of over 140 million people, Nigeria remains highly untapped market where the agency system could be effectively deplored, he said.
Also, the managing director/CEO, Union Assurance Company Limited, Mr. Godwin Odah, in his remark said we must commend the Commissioner for Insurance who is doing everything in order for insurance to make its proper contribution to the GOP in terms of its contribution to the economy.
He said: ÒRecently, he started a very serious process towards deepening insurance through extensive agency network and other strategies to ensure that fake insurance especially in the motor and marine areas are eliminited. If we do that it means the demand for insurance will go to the genuine quarters Ñ real insurance companies not to fake operators. If we develop our agency network, today most of the businesses of the industry come through brokers about 70 to 80 per cent of it, agents are those who operate at the grassroots who are the only one capable of developing individual line businesses.
Said he: ÒNAICOM has seen the need to develop this network because they are the only one that can ensure that the penetration and deepening of insurance which we always talk about is a reality. The only thing we need to do is to ensure that we donÕt make the mistake of the past, agents in Nigeria are responsible for the poor image that insurance has acquired and the attitude of the average insurance consumer to insurance business, a lot had to do with their background, whoever is admitted to the agency system this time must be people whose background can command some respect to the public.
Also, the Managing Director/CEO, Riskguard Africa (Nigeria) Limited and Consultant to NAICOM said of the project: ÒThe second issue in our project is the sanitisation of insurance agency system. It is also to our benefits if we go out to run the agency system properly. We have two advantages, you will drastically reduced the cost of acquiring business and you will reduce volatility of your business. When you have business from your own internal sales team, you can as well have that business for life.
AIICO Insurance is a good example with good agency system and a strong player in life business where it recorded over 60 per cent of its premium income.Ó
