Tag: Fola Daniel

The National Insurance Commission (NAICOM) has urged shareholders of listed insurance companies to safeguard their investments and drive growth of the industry.

The Commissioner for Insurance, NAICOM, Mr. Fola Daniel, who made the call, said shareholders should see safeguarding of their investments as part of their responsibility, adding that the main objective of every investor is to get return on his investment by way of dividends, capital appreciation, rise in the price of stock and bonus issue.

Daniel spoke at a forum between NAICOM and shareholders of quoted insurance companies in Lagos. The event was meant to evaluate and discuss the performance of listed insurance companies.

He said the forum, which henceforth will be held quarterly, would provide them (shareholders and NAICOM) the opportunity to review the performance of listed insurance companies and the level of their returns to investors.

He said given the performance of listed insurance companies in Nigeria today, they have been able to achieve the investment objectives of the shareholders adding that it is open secret that not many of these listed companies make substantial profit if at all they make any profit. He noted that the direct consequence of this situation is that the companies are not able to pay dividends, bonus issue and no capital appreciation.

In fact, the price of most insurance stocks in the Nigerian Stock Exchange (NSE) remains at nominal value of 50k, he said.

He listed the challenges hindering the performance of most companies as low pricing of risk, poor investment decisions, issuance of policy on credit and bloated premium, which the Commission recently addressed and high management and underwriting expenses that is about the worst in the world.

He criticised shareholders who delegate their responsibilities to the board and management of their companies.

He said: “Most of you do not ask questions as to how well your companies are being managed by your representatives. Beyond the annual general meetings which you attend, how often do you seek information and get satisfactory feedback from your board and management? Do you engage in intelligent and constructive interrogation of the financial reports of your companies? If you are not doing this as a shareholder, it means you have no interest in protecting your investment. It also means that your objectives for investing in these companies are at variance with the ones I have earlier mentioned.

“I want to say by way of advice that while you look up to the regulators for solutions, shareholders should have a change of heart and live up to their responsibilities by taking keen interest in what happens in the companies. It is also imperative that the various shareholders associations look inwards and purge themselves of fakes.”

The National Insurance Commission (NAICOM) is raising insurance awareness.

The initiative, which includes creating financial literacy, benefits of insurance, claims processes and rights of the policyholder, is targeted at achieving massive growth in the insurance sector.

The Commission at an interactive session with Insurance Correspondents held in Uyo, Akwa Ibom State, said it intends to consolidate on its initiatives and adequately harness the great potentials of the Nigerian insurance sector for massive growth.

The Commissioner for Insurance, Fola Daniel, said the population of the country, if adequately harnessed, could give added advantage to the insurance industry and further develop the market.

He said the initiatives  assure of an evolving insurance model, a better industry, a growing market and a brighter future.

Highlighting some of the initiatives, Daniel said the Market Development and Restructuring Initiative (MDRI) incepted in 2009, among others, was meant to enforce compulsory insurances and eradicate fake insurance policies in the country.

He said this initiatives have been vigorously pursued by the Commission across the six geo-political zones of the country.

He said: “I am glad that even though the N1 trillion target expected through the MDRI is yet to be attained, considerable progress has been made given available statistics.

“Going forward, the Commission would consolidate on the gains made so far and ensure proper implementation of these compulsory insurance products to be able to enhance the industry’s contribution to GDP.

“An emerging fact under this class of insurance is the interest currently being shown by various governments. A group of underwriters have come together to enforce the Motor Vehicle Third Party Liability Insurance in Imo State in collaboration with the State Government and the scheme is working very well. Another group of 19 underwriters are enforcing the Occupiers Liability Insurance in Enugu State in collaboration with the State Government and the Commission is working to get more states to embrace these models.

“They recognised the need to develop the retail insurance market which has remained grossly untapped considering the vast population of the country.”

The NAICOM boss noted that the Commission had recently launched the Delta State Micro Insurance Scheme at a ceremony in Asaba, the State Capital. Efforts are being made to replicate this model in other states.

He emphasised that as a regulatory body, their primary responsibility is to protect policyholders and safeguard investments adding that they have tried to ensure this in the provision of adequate regulations and effective supervision of the industry over the years.

He said: “Suffice it to say that the industry has witnessed considerable metamorphosis in recent times owing to the new reforms embarked upon by the Commission. Some of these reforms include but not limited to the introduction of Risk Based Supervision, migration to International Financial Reporting Standard (IFRS) from the Nigerian Generally Accepted Accounting Principles (NGAAP); Market Conduct Reforms, Claims Settlement Reforms, Financial Inclusion and combating financial crime, among others, all geared towards developing the industry and improving the general perception about insurance.

“The successes achieved so far in this drive by the Commission may not have been possible without the unflinching support of the industry operators. Where necessary, the Commission has not failed to open lines of discussion with the operators, especially through the NIA, NCRIB, ILAN and ARIAN on issues affecting them before arriving at decisions.

“We are aware that insurance is a business of selling promises. But when these promises made to policyholders and investors are not kept, it then becomes NAICOM’s business to intervene and ensure these promises are kept.

“In doing this, there is always going to be tension, apprehension, disagreements, among others, between the regulator and the stakeholders. This is healthy if only to engender transparency, good corporate governance, better management and appreciation of the laws governing the business. Notwithstanding the resistance from these entities, the Commission remains committed to providing leadership to ensure sanity, good ethical practices, development and growth in the industry.

He called on the media to support the Commission in this drive.

Assistant Director, Inspectorate, NAICOM, Sam Onyeka, while presenting a paper with the theme, “Regulation and Insurance Market Growth: The role of the media, said Nigeria must continue to focus on institutional factors to grow the insurance market.

According to him, insurance market growth is mainly driven by economic factors in developed countries, whereas it is largely driven by institutional factors in emerging countries.

He explained that with economic development, the contribution of institutional factors to the insurance growth would gradually decrease and be partially replaced by that of economic factors.

He said: “Given the net positive effect of institutional factors on the insurance industry where GDP is low, it is crucial for the emerging economies to adjust their strategy in order to achieve market growth.

“Regulatory strategies that can stimulate market growth are compulsory insurances to address underdeveloped demand, market conduct regulation to keep product simple and build trust through distribution channels and solvency regulation to improve insurer stability and increase capacity through risk-based capital requirements.

“Others include public risk mitigation that can make risk insurable and or cover available, premium subsidy that can help make cover available and increase demand while maintaining fundamental principle of risk-based premium and public private partnership to enhance market penetration.”

He said the Commission intends to adopt public risk mitigation, state insurance and public private partnership.

Deputy Director, Corporate Strategy, NAICOM, Babajide Oniwinde, speaking on Financial Literacy & Insurance Education: Issues & challenges, said financial literacy and insurance education need urgent attention because of some industry issues.

He said this is because insurance products are generally technical while market distribution system can be complex.

Oniwinde said full market development can be realised by awareness creation, which brings about inclusive growth.

There is need for ongoing coordinated action and collaboration among all key stakeholders, he added.

 

The National Insurance Commission (NAICOM) is working with operators to fast-track the provision of terrorism cover, Commissioner for Insurance, Fola Daniel, has said.

Daniel, who made this known at the weekend at a seminar for insurance correspondents in Uyo, Akwa Ibom State capital, said the move was necessary to bring relief to victims of terrorists attacks.

At present, terrorism insurance is  excluded from coverage in Nigeria. It is considered a difficult product for insurance firms to market as the odds of terrorist attacks are difficult to predict and the potential liability enormous.

But Daniel said it was time for operators to expedite action and design ways of providing insurance cover on terrorism.

Describing terrorism as the bane of the country, he called on firms to  rise to the challenge of providing cover for terrorism to avert loss of businesses in the industry.

He urged the firms to take the initiative on terrorism insurance before an agency is set up to provide for risks on terrorism.

He noted that the commission will work with the operators to see that the government supports the initiative as done in other climes.

He said the industry has potential for massive growth, adding that the population of the country, if adequately harnessed, will gives an added advantage to the industry to further develop its market.

Daniel said considerable progress has been made under the Market Development and Restructuring Initiative (MDRI), which commenced in 2009, adding that between 2009 and 2012, policies written rose sharply from 72,180 to 152,181, a whopping increase of 111 per cent.

He said premium written within the period also rose from N14.93 billion to N28.68 billion increase of 92 per cent.

Daniel added that the industry in the last three years has had some geometric projections.

He said: “The industry will achieve well over 100 per cent at the time the performance of 2013 is added to the figures available. Despite the inability of the Commission to attain the one trillion naira mark it planned to achieve through the Market Development Restructuring Initiative (MDRI), in 2009 it has vigorously pursued it across the six-geo-political zones of the country and considerable progress has been made given the above statistics.’’

He added: “The performance so far shows that  insurance companies are voluntarily meeting up to their obligation without the commission getting involved and are also paying claims payment.

“Going forward, we will consolidate on the gains made so far and ensure proper implementation of compulsory insurance products to be able to enhance the industry contribution to GDP.”

Veteran insurance practitioner, Prof Joe Irukwu has stressed the need to fast-track the review of the Insurance Act 2003 to enhance the growth of the industry.

Irukwu, a Senior Advocate of Nigeria (SAN), expressed disgust at the slow work on the bill at the National Assembly.

He said when the bill is eventually passed into law, it will change the face of the industry.

He said: “It will change the face of the industry and everybody will be better for it. I pray that the National Assembly will take the matter more seriously and try and fast-track the its passage into law. I think it will help to improve insurance awareness, consciousness and the development of the insurance industry. “

Commissioner for Insurance, National Insurance Commission (NAICOM), Mr. Fola Daniel earlier raised hope that the industry may get a new insurance law before the end of last year.

Giving reasons for the delay in passing the bill into law, Daniel said: “Since the review of the Insurance Act started, we have had about four different ministers and no minister will rush to take actions on the new bill without understanding the basics of the law.”

He explained that the sector had done all that was necessary to increase sufficient understanding of the law for smooth passage.

The commission, he added, had a retreat for committees that have oversight functions over insurance in the House of Representatives, so that when the bill gets to the parliament, it will enjoy easy and quick passage.

He said the bill is aimed at supporting the government’s quest to reduce poverty.

He said: “In the last three to four years, the industry has adopted developmental strategy. We believe that unless the industry is developed, it would lose its vibrancy; the regulator over time will become idle as there will be nothing to control or regulate. So, we have focused more on developing the industry.

“The focus has been on development and that is where we are going. The law that is in the offing will support our development efforts and create jobs. One of the cardinal policies of the administration is to create jobs.”

Daniel explained that a major condition for the development of insurance business is a strong legal system.

He said: “The legislations are not only weak but sometimes difficult to enforce.

The regulatory framework is ‘compliance-based’ rather than ‘frame-work’ as is the case with most advanced jurisdictions. This arrangement hardly gives the commission the capacity to take regulatory initiatives in urgent and critical situations.

“It is, therefore, desirable that the various pieces of legislations constituting the existing legal framework should be consolidated. The Insurance Law Review Committee appointed by the Federal Government to review the existing insurance laws completed its assignment since 2010.

“The draft revised Consolidated Insurance Bill is ready for passage to the Legislature by the Executive. Depending on the agenda of the National Assembly, the country may expect a new insurance regulatory regime before the end of 2013.”

He noted that despite the limitations of its law, NAICOM has continued to provide leadership and roadmap for the industry in the relevant areas through issuing regulatory guidelines, circulars and letters.

One year after the introduction of the ‘no premium, no policy’, operators say it has boosted their income.

Managing Director, FBN Life, Mr. Val Ojumah told The Nation that the implementation of the policy was the best thing that came from the regulator last year.

He said though it was difficult for the public to accept it, they finally embraced it and started buying insurance policies on a cash and carry.

He said the implementation affected the public sector group life insurance because the government was used to buying insurance on credit.

Managing Director, Custodian and Allied Insurance Plc, Mr. Wole Oshin said the regulator has acted in the best interest of the industry with the enforcement of no premium no cover.

He said: “The response of the public has been positive. Before now, they have taken the industry as unserious but it is a much improved industry now.”

Managing Director, Anchor Insurance, Mr Muyiwa Adeduro, said the policy affected his company’s income positively.

He said: “The initiative by NAICOM is commendable because it has helped the industry tremendously in terms of premium collection and increased our income. Although we lost quite a number of customers that are used to paying by instalments or at the end of the year, but they have started taking us more serious than before. It has increased our premium, improved our cash flow and liquidity,” he said.

Last year, NAICOM decided to enforce Section 50 of the Insurance Act, 2003, which operators had ignored.

The section states: “The receival of an insurance premium shall be a condition precedent to a valid contract of insurance, and there shall be no cover in respect of an insurance risk unless the premium is paid in advance.”

NAICOM Commissioner for Insurance, Mr. Fola Daniel, warned underwriting firms against providing insurance cover for their clients on credit.

“Henceforth, no insurer shall grant insurance cover without having received full premium or premium receipt notification from the relevant insurance broker. Any insurance contract issued contrary to the above is therefore null, void and of no effect. The Commission will sanction any operator that issues a policy or grants a cover relating to such a contract.

“The Commission has deemed it imperative to ensure compliance by all insurance operators with the provision of the law in order to protect the interest of policyholders and other stakeholders from the negative consequences of the existing practice.

“This state of affairs has not only increased the credit risk of insurers, but has also introduced uncertainty in the market as to the capacity of many insurers to meet their obligations to insurance policyholders and other stakeholders. Thus, the enforcement of the law is indeed to the benefit of all stakeholders in the insurance industry,” he said.

The Gbong Gwom Jos Da Jacob Gyang Buba has said the apathy to the insurance industry is caused by ignorance and lack of understanding of its merits.

The monarch spoke in Jos, the Plateau State capital, when the management of the National Insurance Commission (NAICOM), led by the Commissioner for Insurance, Mr. Fola Daniel, paid him a courtesy call.

The Gbong Gwom Jos noted that the misgivings might have been due to the activities of a few operators who engaged in sharp practices in the past, and that such problems were not peculiar to the industry.

“Just like any other sector of the economy, the activities of a negligible few may have given rise to such negative perception. But that was not enough to over look the good the industry has to offer the people.

“The people will derive more value from the services of insurance as the industry grows,” the monarch said.

He appealed to operators to be more forthright in their dealings with the public to erase the negative perception of the people about the sector.

He advised NAICOM to embark on aggressive public enlightenment to educate the people on the benefits of insurance.

He urged the Commission to organise one of such campaigns in Jos.

The monarch said he would not only support the campaign, but also appeal to the state government to align with the literacy awareness drive of the commission.

Earlier, the Commissioner for Insurance had told the traditional ruler and his chiefs that the era of insurance firms collecting premiums and not paying claims was over.

He said any policyholder who believed he had been wrongly treated by an insurance company should approach the Commission for redress.

He added that NAICOM not only has the power to regulate, but also discipline any erring insurance company.

The Commissioner for Insurance also educated the monarch and his chiefs on the usefulness of insurance as a tool of risk management.

He said insurance is one of the “cheapest means of managing risk but it is largely misunderstood”.

He added that the Commission would soon embark on an awareness drive.

“We believe that one of the platforms we can use to reach the people is that of traditional rulers and that is one of the reasons we have come to visit His Royal Majesty.”

“We believe if we can get the buy-in of His Royal Majesty, we will be able to get the message across to the grassroots easily,” daniel said.