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FG to sanction MDAs for nonpayment of insurance premium

By on February 22, 2013

The Federal Government has directed its ministries, departments and agencies (MDAs) to comply with section 50(1) of the Insurance Act 2003, which requires that premiums be paid in advance for all insurance contracts or be sanctioned.
The government has also lamented a N24 billion premium debt owed insurance companies by MDAs as at January 2012 despite yearly budgetary provisions for insurance.

According to a circular issued on February 12, 2013, and signed by Yerima Lawan Ngama, minister of state for finance, MDAs or other stakeholders that fail to comply with this directive would be sanctioned accordingly.

The circular copied the presidency and all other agencies stated that non compliance with this provision has undermined the ability of insurance companies to meet their various claims obligation under the contract of insurance to eligible beneficiaries.

“Consequently, MDAs and other stakeholders are by this circular directed and advised to comply with the provisions of the Act, as any MDAs/ organisations found culpable would be sanctioned accordingly. To this end, all MDAs and other stakeholders are enjoined to render their returns on premium collection and remittances to the National Insurance Commission as enshrined in the guidelines”.

Ngama said henceforth, any contract of insurance entered into without payment of full premium in advance shall be legally unenforceable.

“It is expected that the enforcement of this provision of the law will strengthen insurance companies’ ability to meet claims obligations under the contract of insurance”, he said.



[Business Day]