The Nation Newspaper

Category: Insurance

  • NAICOM uncovers insurance scams by brokers, underwriters

    NAICOM uncovers insurance scams by brokers, underwriters

    The National Insurance Commission (NAICOM) has uncovered insurance scams perpetrated by some registered, unregistered insurance brokers and underwriters in conjunction with various state governments.

    Commissioner for Insurance Mohammed Kari made this known while speaking at the 2016 Annual Chief Executive Officers Retreat of the Nigerian Council of Registered Insurance Brokers (NCRIB) held in Ilesha, Osun State. The theme was: Growing Insurance Amidst Regulations.

    Kari said these activities are illegal, criminal and punishable under the laws of the country. He warned brokers and underwriters alike to beware, adding that the Commission has beamed its searchlight on the firms. He noted that the unrepentant companies and individuals engaged in these schemes would answer for their deeds

    The commissioner lamented the increase in number of brokers that are regrettably yet to reflect on the level of insurance penetration in the country. He said: “Indeed the Nigerian Insurance market has grown in the last decades. There has also been a substantial increase in the number of players and activities; although and regrettably too this increase in the number of players especially brokers is yet to reflect on the level of insurance penetration in the country.

    “The only possible explanation for this could be that intermediaries are not creating new business neither are they expanding their operations beyond the major cities of the country and around a few clients that are already converted insurance consumers. This should be of serious concern to any right thinking professional.

    “The face of regulation has changed over the years, but the objectives and purposes have continued to be providing comfort and confidence to the consumers while at the same time developing the market.”

    He stressed that the task of market development is everybody’s, however; it is the trend to quiz the regulator why market penetration is low.

    He said penetration would continue to be low if everyone would only operate from the comfort of the metropolis or chase only existing clients with insurance policies.

    “The poor penetration of insurance in the country is no more a new statement or information. It is a position we all certainly cannot be proud of. What should be done in this ugly situation is the issue. Developing a robust insurance sector in any country requires developing a good strategy on insurance penetration.

    “While the newly formed Insurer’s Committee has set up various sub committees to look at that and more issues, the Commission is complementing those efforts by expanding its enforcement of compulsory insurance’s down to the states level. In the process we sadly found all sorts of under the table arrangements where insurance policies are being offered in conjunction with various state governments to unsuspecting public, sometimes with registered brokers and in most cases with unregistered and unlicensed entities.

    “This is Illegal, criminal and punishable under the laws of the country. Brokers and underwriters alike should beware as we have beamed our searchlight to that direction. Unrepentant companies and individuals that are engaged in these schemes would answer for their actions.

    “We have also identified the limited channels of distribution as a major inhibition factor to penetration. In this regards, we have considered the creation of additional distribution channels and have gone far on the preliminary works and draft of guidelines which would soon be exposed for input,” he added.

    Kari said it is expedient to note that prior to the recent economic challenges, pressure was building for the insurance industry to be more flexible and to approach business in a more dynamic fashion.

    He urged insurance institutions to find a way to break out of the soiled  systems which perpetuate a limited view of the customer.

    It is this view that impresses on us that we are doing well when we snatch a client from another or when we get on a long list of the brokers of a fat government client, though adding no value at all. New models of business and enterprise architecture need to arise; where integrating with newer technology solutions and effecting process improvements that leverage the capabilities of existing personnel and applications can become the norm, he added.

  • STI settles N386.9m claims in Q1

    Sovereign Trust Insurance Plc has continued to show commitment to prompt claims settlement as the underwriting firm paid out a total sum of N386.9 million as claims in the first quarter of the year, the Managing Director of the firm, Mr. Olaotan Soyinka has said.

    He made this known in a statement made available to reporters in Lagos. According to him, the total claims figure was duly verified by the industry’s regulatory authority, the National Insurance Commission (NAICOM) for the period under review.

    Giving a breakdown of the claims paid, he said Motor Insurance claim recorded the highest figure of N151.4 million followed by general accident accounting for N140.8 million while N78.8 million was paid as claim under fire insurance. Other figures are N9.9 million for marine and aviation insurance while N6 million was paid as claim under engineering class of insurance.

    Soyinka stated that over the years, the company’s prompt claims settlement had helped to strengthen the relationship between them and their various customers across the country.

    He said: “We do not allow our customers to go through distasteful experience in the process of getting their claims settled. Our processes are hinged on professionalism, speed, ethics and promptness.

    “STI is fast emerging as a reckoning force in the Nigerian Insurance Industry with its extensive branch network spread across the geographic regions of the country. The company is totally committed to settling all genuine claims within agreeable periods. We believe that this will always keep our customers come back to us.

    “The company has put in place a friendly claim process which ensures that customers do not go through undue bureaucratic process in getting their claims settled in good time.”

  • Guinea partners CIIN on fitness walk

    Guinea Insurance Plc (GI) in its resolve to support the need for people to keep fit and healthy, has partnered the Chartered Insurance Institute of Nigeria (CIIN) in its Street Presence exercise held in Lagos.

    The company’s acting Managing Director, Mrs. Isioma Omoshie made this known in a statement made available to reporters.

    She stated that the company hosted the pre-walk reception of the institute’s members at its Corporate head office at Jibowu, where the pre-walk aerobic exercise and health tips were conducted shortly before the Street Presence exercise began to the destination point – Niger Insurance Plc House, Anthony bus-stop.

    She said the institute observed that the urban lifestyles of members dissuade them from engaging in any form of physical exercise which in effect has triggered poor health and low quality of life hence, the need to awaken interests and participation.

    She stated that the company is committed to rekindling the true spirit of sportsmanship and fostering national unity through interactions among industry players and analysts.

  • 12 million cars owners in Nigeria use fake insurance cover- Senate

    12 million cars owners in Nigeria use fake insurance cover- Senate

    The Senate yesterday mandated its Committee on Banking, Insurance and other financial institutions to invite stakeholders in the insurance sector to look into recent findings which showed that over 12 million motorists in the country use fake insurance papers.

    Stakeholders to be invited according to the resolution of the upper chamber included the National Insurance Commission (NAICOM), registered Insurance companies in Nigeria, relevant law enforcement agencies.

    The stakeholder, the Senate said, should urgently deliberate on ways and means of ensuring the strict implementation and compliance with the six compulsory insurance schemes as provided in the Act and invoke sanctions where necessary.

    The resolutions followed a motion by Senator Ahmed Salau Ogembe (Kogi Central) and eight others entitled, “Implementation of the compulsory insurance in Nigeria as provided in the ‘Insurance Act Regulation, 2003.’

    Senator Ogembe in his lead debate lamented that of the 16 million vehicles in the country, only four million are properly insured.

    He noted that the “Insurance Act and Regulation 2003” expressly provides for six compulsory insurance schemes namely: (i) The Third Party Motor/vehicle insurance (ii) Building under construction insurance (iii) Group Life insurance (iv) Public buildings insurance (v) Workman Compensation insurance (vi)  professional indemnity insurance.

    He further noted that these insurance schemes are made mandatory to take care of third party liabilities arising from the actions or inactions of a person, group/organizations in the course of their activities.

    The Kogi Central lawmaker said that he is worried that the country is grossly under-insured “and  basically, her citizens do not take advantage of services rendered by this very important sector of the economy as a result of many reasons such as; (a) the existence of unregistered insurance institutions within the system (b) ignorance and gross knowledge gap. (c) apathy occasioned by several factors including mistrust and fear for the whole concept of insurance (d) Poverty.”

    Senator Ogembe also said that he is worried that there are presently 58 insurance companies registered with the National Insurance Commission, “yet there are uncountable number of unregistered insurance institutions selling worthless insurance certificates to unsuspecting members of the public.”

    “This reprehensible act is mostly manifest in the third party motor/vehicle insurance scheme where such unregistered institutions connive with relevant law enforcement agencies to perpetrate their act,” he said.

    He noted that Section 3(a) (b), section 4(1-4) of the Insurance Act, 2003, expressly provides the conditions for the registration of an insurance company in Nigeria, yet these provisions are frequently flouted.

    The lawmaker said that he is alarmed at the staggering number of Nigerians who seek for help for various reasons including mishaps at workplace, illnesses traceable to occupational hazards, debilitating injuries and even death as a result of motor accidents, injuries and death resulting from building collapse, despite the “Building under construction Insurance” and the “Public Building Insurance” as provided in the Insurance and Regulation Act, 2003.

    He noted that it is equally disturbing that these Nigerians often have no choice but to have recourse to both the electronic and print media to seek help which more often, do not produce the expected results.

    He expressed confidence that if the “Compulsory Insurance Schemes”” are implemented as provided in the Insurance Act, most of challenges raised would be solved.

    Senator Ogembe added that he is further convinced that insurance is a huge/serious business and its potential in country towards solving social and economic problems cannot be over emphasized.

    He insisted that the Senate should be determined to make necessary changes in the interest of the country and the insurance sector.

    Apart from inviting stakeholders to deliberate on the challenges, the Senate also mandated NAICOM to properly orientate the public on the Insurance Policies as stipulated in the Act and make known to the public the 58 registered Insurance Companies through sustained enlightenment in the national media.

    It said that the National Assembly should pay more attention to the Insurance sector through appropriate legislation and deliberate actions to raise the status of Insurance in Nigeria to be at par with other sectors such as Banking and Capital Market as well as complying with best practices globally.

     

  • ‘New investors’ll drive insurance growth’

    prospective operators are optimistic that opening the insurance industry to new investors will spur huge growth for the insurance market.

    To this end, they are calling on the Federal Government through the National Insurance Commission (NAICOM), to open the insurance industry for more innovative and competitive market.

    The Commission had before now, said it would not issue fresh operating licences to new investors but would rather support acquisition of existing insurance companies.

    Despite this pronouncement, the Commission issued licences to investors which it deemed would add value to the industry.

    Presently, there are 19 brokerage and underwriting firms seeking to commence operation in the sector.

    Some of the concerned underwriting and brokerage investors have, however, expressed anxiety on the need to get response from the regulator on the state of their applications almost a year after applications were submitted.

    Section three of the Insurance Act 2003 states that no person shall commence or carry on any class of insurance business in Nigeria unless the insurer is registered by the commission.

    The section of the act further explains that the commission would only give approval when it was certain that it would not be against public interest or the interest of the policyholders.

    At a press briefing in Lagos, the Commissioner for Insurance, Mohammed Kari, confirmed that the commission published the names of some operators who applied for new licences last year.

    He said the idea of publication was to allow the public to make comments on those that applied.

    While the commission had approved new licences for some of them, he said some others were yet to be approved.

    Some industry analysts said that to increase insurance penetration in the country, it is important for NAICOM to intensify efforts on micro-insurance and take full initiatives to make insurance available to more Nigerians and encourage new investors to invest in insurance.

    They said the commission should consider reduction of the capital base for micro-insurance and should grant approval for licence quickly.

    According to them, development of insurance will increase employment in the sector and encourage new investors to make their contribution to insurance growth and development, which is what the sector needs now.

    One of the investors who spoke under the condition of anonymity said there are untapped potentials in the Nigerian insurance market that they can leverage on to turn the industry around. He said the Federal Government should grant keen investors regulatory approvals for take-off.

    He said: “There are opportunities especially in the retail space which holds a lot of potential for growth. The rising middle class, young population and growth of shopping malls across the country are sales spots for insurance. This requires strategic planning and innovation.

    “We are eagerly waiting for licensing from the regulator having applied for more than one year now because we cannot operate without licence.”

    The Director-General, Nigeria Insurers Association (NIA), Sunday Thomas, said the public patronage of the industry is yet to reach the desired level notwithstanding the various legislations enacted to promote patronage. He stressed that the largely untapped market creates opportunities.

    “The insurance industry in Nigeria presents a lot of growth opportunities due to the low insurance penetration.

    “Attention should be given more to the development of the retail market while waiting for corporate accounts rebound. Presently, insurance seems to have become investors delight,” he added.

  • Risk-based supervision may trigger recapitalisation

    Risk-based supervision may trigger recapitalisation

    Recapitalisation is imminent in the insurance industry as the supervisory authority, the National Insurance Commission (NAICOM), begins enforcement of risk-based supervision (RBS). Omobola Tolu-kusimo writes.

    The implementation of risk- based supervision (RBS) by the National Insurance Commission (NAICOM) is likely to result in recapitalisation of the insurance industry soon.

    RBS is a structured supervisory approach aimed at identifying the most critical risks that face each insurance company. The industry regulator, through a focused review, assesses each company’s management to identify risks and financial vulnerability.

    In other words, companies will be made to grow their capital according to the volume of their businesses. The higher the risk profile of the insurer, the higher the capital it must hold.

    RBS requires supervisors to assess whether an insurer’s governance, risk management and internal controls are adequate, and whether the solvency and liquidity of the insurer are sufficient to withstand unexpected shocks.

    Presently, the Commission is gradually implementing the RBS so as to achieve a seamless transition of the industry into the new system.

    NAICOM ‘s Director of Inspectorate, Barineka Thompson, said the Commission’s objective is to strengthen the risk management systems of insurers, allow for the identification of insurers’ strengths and weaknesses and identify areas where difficulties or challenges exist for the insurers.

    He said: “We intend to achieve a supervision system that is in accordance with international best practices, risk focused supervision; preventive control; promote appropriate regulatory action in line with the risk profile of an insurer; focus supervision resources more effectively and efficiently and have a more flexible regulation emphasising on principles rather than the rules.

    “The RBS will allow the systematic assessment of insurers’ risks using a formalised framework at regular intervals; encourage a strong risk management function in insurers; promote the cost-effective use of regulatory resources; and allow continuous monitoring, early warning indicators, prompt intervention and timely action.”

    In transiting to RBS, Kari pointed out that the Commission recognises the need to plan the transition carefully and appreciate the scope and depth of the initiative.

    “We recognise the main risks arising from doing the transition hastily and without proper planning. Adequate time and training is required to make the transition successful. RBS requires supervisors to exercise judgments that are more subjective than they may be accustomed to doing under compliance programmes, among others.

    “The standards and guidelines are the Code of good corporate governance–2009, Risk management guidelines–2012, RBS implementation roadmap to be revised from time to time; Implementation of International Financial Reporting Standards (IFRS)–2011/2012; RBS implementation framework–2014; Revised prudential guidelines for insurance institutions–July2015; Market conduct and business practice guidelines–July2015 and Preliminary study of different models–(concluded)

    “Best practice is that supervisors introduce RBS gradually and in tandem with their existing compliance approaches. This helps to minimise the supervisor’s own risk—the risk of ineffective supervision. The benefits of RBS to policyholders, the financial soundness of operators and general stability of the economic system is enormous.

    “Across jurisdictions there are emerging trends for insurers and brokers. Both the work being undertaken by the International Association of Insurance Supervisors (IAIS) and Europe’s Solvency II are driving much greater sophistication and risk-sensitivity in prudential supervision with the result that risk-based systems are gradually being introduced outside Europe. In an increasingly globalised market regulators are looking at what other jurisdictions are doing with the result that leading markets are broadly taking a similar approach to supervising insurers.”

    Meanwhile, operators in the industry are implementing the RBS framework and bracing up for the challenges that come with the initiative.

    Chairman, Consolidated Hallmark Insurance Plc, Obi Ekezie said a major plank of NAICOM’s intensified regulation is the risk based supervision. According to him, it is likely to result in a call for further injection of capital by operators soon.

    He stated that the new NAICOM helmsman, Kari, sent a strong warning to operators about the regulator’s preparedness to sanitise the system.

    The Chairman, Publicity and Communication Sub-Committee of the Insurer’s Committee, Oye Hassan-Odukale, said operators and the commission have agreed to transit to RBS model, adding that it will enable operators shore up their capital in line with the businesses they want to underwrite.

    “We had a lecture from NAICOM on RBS, which is where we are transiting to. With RBS, there would not be common capital base for insurance companies again. Companies have to determine their capital in line with the business they do.

    “The board of insurance companies would have the responsibility of determining the risk capital for their companies, which would be supported by the appropriate capital. This is new in Nigeria. Just like the International Financial Reporting Standard (IFRS), we are transiting to this new initiative and NAICOM is taking us through it so that we can move our capital structure to this base,” he said.

  • Prisca Soares on World Bank

    Prisca Soares on World Bank

    The African Insurers Organisation (AIO) is collaborating with the World Bank on the development of agricultural insurance on the African continent, AIO Secretary-General Ms Prisca Soares has said.

    Ms. Soaris, who  made this known in an interview with The Nation in Marakech, Morroco, said the organisation is also working with the World Bank on micro-insurance.

    She said: “We are working closely with the World bank on agricultural insurance and micro-insurance. We hold meetings and had capacity programmes with them. We also did actuarial techniques for middle management staff. This was done in the period of two years. We first of all organised with French speaking countries and subsequently for English speaking countries.

    “The trainings were done in three modules for a total of 30 days in Nigeria and we also have the online training working with the professors that run our faculty. In 2014, we organised with them an international conference on insurance and reinsurance here in Marrakech.

    “After that the conference, it was decided that with the importance of agricultural insurance in Africa, we should organise a training programme which we reported to the general assembly of the AIO. This took place in June last year in Casablanca. We are holding another one in this month in Nairobi, Kenya for English speaking countries,” she noted.

  • NAICOM’s operational licences delay worries stakeholders

    NAICOM’s operational licences delay worries stakeholders

    About one year after the National Insurance Commission (NAICOM) published names of potential brokers and an insurance company in the national dailies, the Commission is yet to grant many of them operating licences to carry out insurance services in the country.

    The delay has sparked agitations amongst the affected stakeholders and experts who fear the regulatory body has closed the insurance market from keen investors.

    The potential brokers’ names published shortly before the exit of the former Commissioner for Insurance, Fola Daniel from office, named 18 brokerage firms and an insurance company that had sought licences to operate in broking and underwriting capacities. The publication precisely was on June 29, 2015. The commission asked the general public in the publication to raise objections on any reason why they should not be granted operational licences.

    “The general public is hereby put on notice that the under listed firms have applied to obtain operating licences from the NAICOM to transact business as insurance brokers and company respectively. In accordance with extant laws, members of the public are requested to notify NAICOM within 21 days of this publication, either in writing or through the call centre numbers stating any objection or reason why any of the firms should not be registered or granted operating licence,” NAICOM said in the publication.

    But 21 days has since passed, and almost one year after, the commission has not indicated receipt of irregularities against these companies. While the commission is yet to license the only insurance company, Heirs Insurance Limited on the list, it has given licence to seven broking firms including Stanbic IBTC Insurance Brokers, a subsidiary of Stanbic IBTC Bank Plc, RSM Insurance Broker, Riskbridge Brokers, Titan Brokers, BI-Meck Brokers, Tespaurath Brokers and Hiscover brokers.

    The brokerage firms on the waiting list are Elohim Insurance brokers, Okikiaje Insurance Brokers, Destiny Insurance Brokers, Date Palm Brokers, Green Pacific brokers, LMC Brokers, Avenues Brokers, Topflight Brokers, Eleazar brokers, Banksome Brokers, and ARU & Jay Brokers.

    Meanwhile, some industry observers who express worry over the development said some of the investors yet to be granted licence have huge potentials that can turnaround the insurance market.

    For instance, an observer who does not want his name mentioned said Heirs Insurance is a potential market developer. It is a fully-owned subsidiary of the Heirs Holdings Group, owned by Chairman of UBA, Tony Elumelu. It is managed by professionals with experience in banking, law, business strategy, insurance and risk management.Heirs specialises in investing in Africa and already have investment in the health sector, agri business, real estate and hospitality, oil and gas, power and the financial services sector.

    He stated that with an industry that barely recorded shareholders fund of N349.4 billion, gross premium of N30.5 billion, assets of N838.6 billion, insurance penetration at 0.3 per cent, density at 10 with global ranking at 61, there is need for NAICOM to allow fresh and big investors to come in.

    Another industry observer said there is  large untapped market in the industry that can increase insurance penetration. He urged NAICOM to encourage new perspective to drive penetration and create more awareness in the country.

    He noted that before NAICOM got to the level of publishing names of potential companies, it would have carried out all checks especially financial and security checks.

    He said: “Names of companies seeking operational licences were published by NAICOM in case there was any objection from the public. Presently, the Commission has been silent and has not disclosed that it received any report on them from the public.

    “It is 11 months now and I think NAICOM should make its intentions about the rest of companies known. Some of these companies have the potential to turnaround the market and they should be granted license to operate.”

  • ‘African insurers may lose $1b on mega ships’

    African insurance industry may need to prepare for over $1 billion loss in future due to piracy attacks on mega ships, Allianz Global Corporate & Specialty, has said.

    Allianz made this known at the African Insurance Organisation Conference in Marrakesh, Morocco while briefing journalists on key findings of the Allianz Safety & Shipping Review 2016 report.

    In the report, Allianz said that progress continues on piracy in Africa with incidents down in Nigeria and Somalia. It noted that although piracy risk remains high, attacks continue to increase in South Asia.

    The report said: “Crew kidnapped and held for ransom, doubled to 19 in 2015 with all the result of five attacks off Nigeria. During 2015, risks to shipping in the Middle East Gulf and surrounding waters escalated as politically-charged disputes took hold.

    “In Yemen, the ongoing war and blockades had not affected ships sailing through the Gulf of Aden at time of writing, but calls at the country’s ports had been curtailed, with Aden accepting a fraction of the calls it handled before the dispute. In North Africa, the Egyptian Armed Forces officially declared a “state of war” in July 2015. Again, the war and disputes there had not had a notable effect on shipping, but with Egypt’s control of the critical shipping point, the Suez Canal, shipping is keeping a watchful eye on events in this country.

    “Operators must remember that the provision of war insurance does not mean that the taking of cargo from this area is safe; insurance should not be viewed as a safety blanket. The industry may need to prepare for a $1billion+ loss in future due on mega ships.

    “Cyber-attacks on the shipping industry are often under-reported as companies opt to deal with breaches internally for fear of worrying stakeholders.”

  • ‘Focus on economy not strike’

    The Executive Director Leadway Assurance, Ms. Adetola Adegbayi, has called on the Nigeria Labour Congress (NLC) to focus on how to grow the economy rather than embarking on strike over increased petrol price.

    Ms. Adegbayi, who made the call while speaking on “The Role of Loss Adjusters within a Challenging Economic and Insurance Environment” at the Investiture ceremony of the Institute of Loss Adjusters (ILAN) in Lagos, said the NLC should be embarking on strike to force the oil companies to have refineries, which will in turn serve the people, adding that the Labour should be more concerned about how the Nigerian economy can be restored and not be import dependent.

    She said: “Labour had called on Nigerians to embark on strike. I begin to wonder what we are striking for. Is it the fact that there is increase in the price of petrol or what is really important? Is it not more important for us to focus on what happens to the value of naira in respect to dollar and other foreign currency we use in importing this petrol?  Shouldn’t we really be striking to force the oil companies to have refineries in-country?

    “The crude comes from the Niger Delta and within this region; there is an exploration into the interland. So if we are to calculate the kilometres/miles from one end of the Delta to other areas including Lagos State, we will have enough points to position refineries to serve the people.

    “Dollar appreciated to N350 and pounds to N500 because our economy is too dependent on importation. Our economy has been bastardised that it’s not self-sustaining. So shouldn’t refineries be the priorities of Labour because more people will be employed. When this happens, they will acquire assets, acquire liabilities and the insurance industry will have more things to protect.

    “Why is it that labour is getting us to be striking against what is inevitable when they can be striking to compel what is possible that has not been done, it is when we compel what is possible that has not been done that our industry begins to grow,” she added.