A CRITICAL APPRAISAL OF THE LEGAL FRAMEWORK FOR INSURANCE PRACTICE IN NIGERIA

Abstract

Insurance is a sine qua non to any thriving economy. It is axiomatic that without insurance, cultures, individuals, corporations and governments would not recover in time from natural and unnatural disasters. Most times, losses and calamities occur unexpectedly, unpredictably and without warning. Critically, insurance cannot stop the happenings of losses per se but will immediately cushion and mitigate its devastating effect. Insurance is a socio-economic device and a risk transfer mechanism whereby the risks and perils of life and nature are passed from one person known as the insured to an organization called the risk bearer. In the event of the risks insured happening, the risk bearer will indemnify the insured based on the agreed terms and conditions embodied in the insurance policy. There is a plethora of insurance laws in Nigeria, but lamentably, these laws have not stimulated the growth of the insurance industry. The Nigerian insurance industry is expected to not only galvanize our national economy, but also to increase the quality of life through various insurance policies of the majority of Nigerians. Hence, the research sought to know why despite the practice of insurance even before Nigeria’s independence the industry is still bedeviled by outdated laws and unbecoming practices that have retarded the flourishing of this critical financial subsector. Doctrinal approach methodology was employed in the research endeavour. The primary sources were the Insurance Act 2003, the National Insurance Commission (NAICOM) Act 1997 and the Nigeria Council of Registered Insurance Brokers (NCRIB) Act 2003 whilst textbooks, journals, newspapers and internet sources constitute the key secondary source. The research found that the compulsory insurance laws were being contravened with impunity and the regulator was not sufficiently empowered to carry out their responsibilities. Additionally, the study adopted a qualitative research methodology that ensured a critical appraisal of primary and secondary sources of data which entailed the provisions of all legislations affecting insurance practice in Nigeria. Consequently, the work discovered that amid poor image perception and below average performance, the Nigerian insurance industry is ironically challenged by some practitioners’ crass practices. On that account, it was recommended that the extant insurance laws – Insurance Act 2003 and others NAICOM Act 1997 and NCRIB Act 2003 and should as a matter of urgency be amended to not only reflect modern insurance laws and practices but also our sociocultural environment. A further recommendation was that the insuring public whose claims were not paid by delinquent underwriters despite the admission of liabilities, should be paid directly by NAICOM. The research concluded that even though insurance is of international character, nonetheless our insurance laws and practices should be robust, dynamic, pragmatic and reliable in ensuring prompt payments of insurance claims and swift resolution of dispute. By so doing, the global business community will take Nigeria’s risks sector seriously.