The Role of National Insurance Commission Towards Insurance Penetration to the Grassroot

The Role of National Insurance Commission Towards Insurance Penetration to the Grassroot

 Review of the related literature to the topic “The Role of National Insurance Commission towards insurance penetration to Grass Roots” has been discussed by many experts in the industry; some of the experts who highlighted on these are below.

According to Mr. Daniel (2010) said that the success of the various strategies adopted by the National Insurance Commission (NAICOM) to ensure insurance penetration in Nigeria in 2010, most especially through the most touted market development and Restructuring initiative (MDRI) hinge on insurance intermediaries such an insurance Broker and Agent. This was the submission of the commissioner for insurance and boss. National Insurance commission of he commissioner for insurance. (NAICOM) Mr. Daniel, while reading his address at a workshop on “Downscaling of (MDRI)  implementation” to the insurance intermediaries in the countries. According to him, he success of the strategies would depend on the cooperation and support of all stakeholders, stressing that (NAICOM) does not expect less from all concerned bodies. Mr. Daniel revealed that several workshop and seminal has been organized to initiate all stakeholder on the strategies to implement the MDRI by first quarty of 2010. Mr. Daniel said that the commission would embark on launching of the compulsory insurance in six geopolitical zones inclusive of Lagos and Abuja. He also disclosed that thereafter the enforcement team already put in place in all the 36 states of the aeration would commence work on the enforcement of the compulsory insurances.

Mr. Danile said that the brokers and agency system that are about to revive has a crucial roles to play in ensuring the success of the (MDRI) programme given their business network. They should be ale to utilize the large size of their network spread across the country to promote the good image of the industries and depend insurance penetration to grassroot.


  1. i) To capture the potential subscribers form the garssroot.
  2. ii) Bringing insurance closer to the garssroot level

iii)    To increase insurance contribution to the Gross Domestic product to the nation.


The problem is 100 percent form the operators and the regulators. According to a report submitted to NAICOM at the end of visibility study for sale of micro-insurance, it will interest you to know that the industry have been missed for so many years believing that Nigerian don’t like insurance. The report revealed that 40 percent of Nigerians don’t have any opinion abut hat insurance is all about, either positive or negative. The insurers are busy asking them what is insurance what does an insurer do and others, but they don’t know even at the micro-insurance level, some of them are saying may be if you want to buy a car and your money is not enough then you can go to insurance company to help balance the money, imagine people with such understanding. When the industries were dong enforcement of compulsory insurance about 100 percent of people who don’t have insurance were ready to buy insurance right at the sport.

There are some basis problem from the part of the part of the operators and the regulators.

The problem of access to insurance usage the mortgage sector has not seen the usefulness of insurance in their business and such is a serious problem. Low level of awareness is another problem and the irrelevant products in the market are another major problem affecting the effort of the NAICOM to penetrate insurance to grassroot.


In order to arrive at a proper and efficient regulation and control of insurance institution in the light of provision, registration, operation and collection of assessment levy etc. The machinery in place for supervision must be adequate and capable to perform a thorough supervision. The provision of section 31 to 35 are therefore important if the activities  of the commission would not be grounded to a half by a multifamous litigation the decrees establish on inspectorate department for the commission which shall be responsible for carrying out the supervisory function in aspect of insurance institutions. The commission for this purpose shall.

  1. Authorize not less than once in 2 years an inspection, reexamination or investigation of every insurance institution for the purpose of satisfying the commission as to whether or not that provision of the Decrees or any regulation are been comply with.
  2. Authorize one or more inspector or other officer to inspect, examine or investigate any aspect of the insurance business and
  3. Submit to the minister a half yearly report on the activities of the inspectorate department constitute an important organ of the commission and the image making of the commission can either be made or married by the department generally, an inspector is empowered to examine, investigate the book and affairs with right of access to the book of account, document and voucher book of insurance institution.


Insurance is being regulated because of the following reasons.

  1. i) For future performance: Controlling and managing an insurance company involves custody of large sum of money belonging to policy claimants, beneficiary of policy holders and shareholders.

The financial collapse of insurance company can involve serious political repercussion. The insolvency of an insurer (particularly a life assured) can be traumatic and this makes the government to regulate the industries through National insurance Commission.

  1. Complexity nature of the business: Government regulates the industries in order to avoid difficulties in transecting insurance business in Nigeria.
  • Unknown future cost: The establishment of price for insurance is a complex activity and involves the incorporation of mathematical analysis into competitive business decision process. Unlike computer and motor vehicles, insurance is a product for which the cost of good sold is not known at the time the price is set, indeed, even estimating the ultimate cost can be very difficulties.
  1. Violation of public Trust: As in any line of business, violation of public trust in insurance. These include failure by the insurer to live up to he contract provision formulation of contract that are misleading and that seem to offer benefit they do not cover.


 Market development and restructuring initiative is one of the strategies and weapon which the national insurance Commission was using towards penetrating insurance to grassroot. The (MDRI) of NAICOM was aimed at addressing the issue of compulsory insurance product, insurance Agency system, fake insurance institution and Risk and Risk Base supervision.

The project was structured as a medium term plan between 2009 and 2012, of installing the first phase of the necessary reforms in the area of industry capacity, market. The National insurance Commission (NAICOM) adopted market development and restructuring initiative (MDRI) meant to derive insurance penetration in the country has recorded about 75 percent success. This development said that the industries operators are leading the industries in the right direction.

The managing Director, Risk Guard African Nigeria Limited Mr. Vemi Soladoya disclosed that the initiative is a turning point in the insurance industry because operators, regulations service provider and government have realized that there is something going on in the industry. Market development and restructuring initiative is a turning point because it was from that stage that insurance operator saw the regulator leading the market.


The National insurance Commission plan to depend insurance penetration using micro- insurance means. The commission has entered into partnership with relevant organization to bring micro-insurance training closer to Nigeria insurance operators and the practitioners. The commission is partnering with Nigeria insurance Association (NIA) and other agency to organize an “international Micro- insurance conference billed for Abuja between September 10 and 11, 2013. Organizers of he conferences said it would serve as an incubator of new idea where key stakeholder in he Nigeria insurance market and related parties will discuss approaches for promotion and practical implementation of micro- insurance. The conference will provide opportunities for policy makers, private sectors, innovators, representative form civic society and technical assistance provider to network with their peer, discuss their experience, exchange knowledge from good practice an discuss innovative approaches to promote micro- insurance in Nigeria and to enhance its penetration to grassroot in Nigeria.

The micro- insurance initiative is one of the programme of (MDRI) designed to increase premium generation and deepen insurance penetration, soladoye, consultant to (NAICOM) on micro- insurance in (2009) predict that over N60 billion opportunities to be taped by unsure and panacea poverty alleviation research according to him had revealed that micro-finance bank, the chairman National Association of micro-finance banks (NAMB) Olufemi in 2010 appealed to underwriting firms to extend the service to the grassroot where micro- insurance client reside to depend insurance in the country.


It is an insurance contract which rely on a pact among participant to guarantee each other without element of gambling which is prohibited by the Koran. The participant inest in fixed sum for a fixed term to be distributed without discrimination according to traditional underwriting principles. They must incorporate mudarabad and Takuful principle to be compatible with Islamic doctrine. To deepen insurance penetration, there is need to develop insurance products that are complaint to Moslems. The Nigeria population almost has equal population proportion of Christian and Moslem. The Koran (The source and glide for all social and economic decision and institution for devout Moselm) proscribes the payment of interest (RIBA) and gambling. Like Western banking, western insurance may be dismissed by devout Moslem as a term of usurp or gambling (Al-kurd 1995). To be compatible with Islamic principles Islamic insurance must incorporate mudarabad and Takaful.


Is a form of partnership where one party provides the fund while another provides the expertise and management. The parties share any profit on a pre-arrange basis. Islamic insurers invest fund according to the Sharia (no fixed income securities, no investment in certain companies such as breweries). Business building a profit-sharing (rather than interest paying), pooling arrangement, they fully respect the Riba-prohibition. According to Al-kurd David (1995) stated that the Islamic insurance practice will contribute allot towards insurance penetration to the grassroot and also help in creating more awareness to those with the ignorance of what insurance is all about and what it can contribute to them.


The Nigeria Agricultural insurance cooperation Decree No 37 of 1993 established Agric Insurance in Nigeria in order to enhance the development and penetration of insurance of grassroot. The scheme has the function of implementing, managing and administering the agricultural insurance scheme established by section 6 of this Decree.

  • To subsidize the premium charge on crop and livestock
  • To encourage institution lender to lend more for agriculture in production in Nigeria.

One of the cardinal programme of Obasnajo led administration when it came on board in 1999 was radical development of agriculture in all its ramification. Not only as a veritable way bringing about the all round development of Nigeria states from the very beginning, the scheme provides cover to only two crop items-maize and rice, two livestock items-cattle and poultry and some commercial business like farm building, machinery and equipment. The cover has since been extended to cover more items namely 21 crop items, 9 items of livestock and 12 types of commercial businesses. And at the present, efforts are being intensified to increase the number of items under cover to include fisheries, perishable vegetable and more agricultural product.

The Nigeria Agricultural insurance cooperation is quite different form others and is always there for the farmers (NAIC). They pay the farmers their compensation adequately.

According to the managing Director Mr. Kwati (NAIC) is living up to its responsibilities, he always emphasize that the prompt payment of claim is always the cardinal philosopher of the cooperation. The scheme is a thorough means by which the penetration of insurance to grassroot will be achieved.

One Comment on “The Role of National Insurance Commission Towards Insurance Penetration to the Grassroot”

  1. Odrande tako says:

    please can you send it to my email thank in advance

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