Compulsory Insurance & 4 insurance made compulsory

By admin October 1, 2022 Insurance World 0 Comments

Insurance made Compulsory

In the world of insurance, the most pressing challenge faced by most insurance companies is a lack of information or awareness and some insurance are made compulsory (Compulsory Insurance)

Many people have zero knowledge about what insurance is all about not to talk of compulsory insurance, especially in Nigeria.

As a result of ignorance, many individuals do not consider the existence of insurance necessary in the course of carrying out their daily business activities.

But the good news is that in most countries of the world, a provision has been made by the Law to provide protection to the general public in the event of any unexpected risk, to ensure sustainable growth and development which in other words can be referred to as compulsory insurance.

what role does insurance play?

Generally, insurance is actually based on the idea of probability and the principle of large numbers.

what this entails is that since the number of persons making the contribution is large, it is very easy to build a large pool of money from their minor individual contributions.

Also, this token generated from their individual contribution enables them to cover a loss suffered by any of their members.

What is the benefit of insurance?

The value and the benefit of insurance are too numerous to mention. Insurance restores the hope of the common man facing any kind of loss by making a proper provision for assisting them.

Insurance also enhances businessmen’s confidence to run their businesses with the hope that the insurance company will relieve them in the event of any unexpected loss by helping them recover part of it.

In considering the above-listed benefits, most people have referred to insurance as a business that propels the existence of other businesses.

What is compulsory Insurance?

Compulsory insurance, also called mandatory insurance, is the kind of insurance made compulsory by the government {Law}, most especially for the aim of providing protection to third parties and the general public.

Compulsory insurance is any type of insurance coverage that is required by law before individuals or businesses may engage in certain activities. The idea behind this type of mandatory coverage is to protect the well-being of those who would otherwise be adversely affected if the events covered in the terms of the policies were to take place.

From this perspective, the requirement of compulsory insurance is intended to protect the interests of everyone concerned, including those who carry the insurance since doing so can often make it possible to avoid the cost of lengthy litigation.

However, it is the government or agent’s regulation that requires the general public, persons, organizations, or some reputable firm to purchase a minimum level of relevant insurance coverage, such as mandatory bank deposit insurance and mandatory universal health insurance.

Also, it is very important to understand not all insurance products are compulsory. For instance, insurance in respect of the education of a child is not compulsory and lots of other ones are.

Tracing back from 1945 to 2009, many laws, regulations, and some agencies have made insurance compulsory but the rate of people compliance is very low.

most importantly, compulsory insurance is aimed at protecting citizens from the identified risks.

Fake licensing offices and other public places have done significant damage to the image of the insurance industry.

To end these fake and fraudulent activities, the national insurance commission is disseminating information or enlightenment campaigns to teach the general public the value and benefit of appropriate insurance and also highlight insurance products made compulsory by law to prevent the rate at which innocent citizens fall into the hands of fraudsters.

In Nigeria, the insurance made compulsory is as follows:

1. Health care professional indemnity: This insurance is made compulsory under section 64 of the Insurance Act 2003.

2. Statutory life insurance group: This alone is contained in section 3 of the motors vehicle {third party} Insurance Act and section 68 of the Insurance Act of 2003.

3. Occupiers Liability Insurance: The occupier’s liability insurance was made compulsory under section 65 of the Insurance Act of 2003.

4. Builder’s Liability insurance: This is made compulsory under section 64 of the Insurance Act. 2003.