Insurance Policy and the Nigerian Law

Considering the risky nature of doing business in the 21st century, the threats hounding our lives and the unfortunate reality of accidents steering our way, there is every reason why an insurance policy should be considered to be somewhat a compulsory need. Insurance laws will vary from nation to nation based on what legislators in each country think will be best for the citizens (policyholders) and the insurance providers in general. In Nigeria, while there are dozens of renowned corporations extending their services in the insurance industry, it is generally important to understand the insurance laws of the land and the nature of insurance policies available before you can settle for your ideal plan whether for business or personal purposes.
National Insurance Commission (NAICOM)
Established by law, the National Insurance Commission (NAICOM) is a statutory body of the Federal Government. As the industry regulator and as set out in the Nigerian Insurance Act 2003 – NAICOM reinvigorates insurance practice, use and regulations in the nation. In 2011, NAICOM had fixed the end of March that year as the date by which all compulsory insurance policies, under various Nigerian statutes, would be fully enforced and penalties imposed to non-compliant players.
Compulsory Insurance Policies
About sixteen insurance laws were made compulsory to guarantee the protection of lives and properties as stipulated in the 2003 Act. The need to enhance economic growth and national development were the other factors motivating the imposition of these laws. Out of these 16 compulsory laws, five fall under the enforcement of the National Insurance Commission. These include:
a)      Statutory Group Life Insurance – this law requires that all employers should make up group insurance premium payments so as to maintain the life insurance (policy) to protect an employee for minimum 3 times the total yearly emolument of the employee.
b)      Health Care Professional Liability Insurance – all health care service providers in Nigeria must obtain and retain a professional indemnity insurance cover from an insurance provider listed and approved by the National Health Insurance Scheme (NHIS) Council.
c)       Builders Liability Insurance – real property builders that have more than 2 floors are required to register and insure the building from all risks resulting from the builder’s negligence or construction negligence from the builder’s staff, consultants or agents.
d)      Occupiers Liability Insurance – public buildings must be insured against hazards such as collapse, earthquake, fire and floods.
e)      Motor Vehicle Third Party Insurance – no one should use a motor vehicle unless it has been insured against damage to the property of third parties.
In addition to these five, Employee’s Compensation (which replaced workmen compensation) is the other kind of insurance policy that must not only be obtained but also retained in Nigeria. This policy requires every employer to, within the first 2 years of the start of the Employee’s compensation act; make a minimal contribution of 1 per cent of what the employee totally earns to the Employee Compensation Fund. This compensation fund is used to compensate an employee in the case of disease, disability or injury arising in or out of the course of their employment.

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