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Tag: Insurers

  • NIA pledges enforcement of insurers’ market agreement

    NIA pledges enforcement of insurers’ market agreement

    The Nigerian Insurers Association (NIA)  would soon enforce market discipline by encouraging peer review among member companies with a view to aligning the market practice with international best practices.

    This was disclosed by the newly inaugurated Chairman of the association, Godwin Wiggle at the ceremony marking his investiture as the 21st Chairman of the NIA, where he highlighted his vision for the association.

    The association, he said, has commenced the implementation of a market agreement as a way of checking ethical breaches, promoting discipline and improving service standard in the market.

    NIA market agreement, which stipulates infractions and penalties for inadequate pricing of risks, was signed by all the chief executive officers of NIA member companies in 2009, but it there are signs that members may have dumped the agreement because most of them don’t abide by it. No company has been sanctioned for failing to abide by the agreement even when companies break it.

    Wiggle said Nigeria has the comparative advantage in the production of oil and gas, therefore, the association will fast-track the process of re-establishing the oil & gas insurance pool to allow the industry reap the full benefit of the Nigerian Content Act.

    He also said the association will sustain the current effort at addressing those laws that are militating against the growth of the market, noting that the Companies Income Tax Amendment Act (CITA) 2007, amongst others, readily comes to mind.

    Wiggle further stated that the association is appreciative of the efforts of the National Insurance Commission (NAICOM) in promoting micro-insurance to deepen insurance penetration in Nigeria.

    He said: “My administration will take up the challenge of micro-insurance by encouraging member companies to institute corporate structures that will ensure the success of the initiative.

    “We will also reach out to other regulators in the financial services sector whose oversight functions impact on our business. We will increase the support for the technical committees of the Association with a view to realising their potentials, which will be harnessed for the achievement of the overall goals of the Association while strengthening the cordial relationship that exists with other arms of the industry.”

    President, Nigerian Council of Registered Insurance Brokers (NCRIB), Ayodapo Shoderu, in his goodwill message delivered by his Deputy, Kayode Okunoren, said the emergence of Wiggle as NIA Chairman will usher in the envisaged harmonious and progressive relationship between the association and the council.

    He noted that the Nigerian insurance clients have become more demanding and sophisticated, hence the need for all operators to be more professional and cohesive in the delivery of services. “Irrespective of our professional divide, we must come to terms with the need to always collaborate in order to project a positive image and to collectively grow our industry,” he said.

  • Insurers turn to big data to identify risks

    Insurance firms are turning to “big data” from satellites,social media and even cigarette sales at gas stations to help identify risks and build up customer profiles.

    According to Reuters, insurers and reinsurers hope that real-time analysis of data about personal behaviour will enable them to project damage claims and fine-tune prices to fit the risk being covered, and also help them spot fraud.

    Troves of data are being collected via the technology phenomenon known as the Internet of Things, where cheap, network-connected sensor devices are embedded in all manner of industrial equipment, transport vehicles, appliances in the home and even the health monitors and smartwatches that consumers have begun to wear on their wrists.

    Hamilton Re Limited, a new Bermuda-based reinsurer, hopes that heavy data-crunching technology will give it an advantage over rivals and boost its bottom line.

    “If we do it successfully, we ought to be able to deliver our products at lower cost with an improved loss ratio,” said Bob Deutsch, chief strategy officer for the group.

    “In underwriting, you have a better ability to plot whether you’ve got a concentration of risk in certain aspects of tornado alley,” Mr. Deutsch told Reuters on the sidelines of the annual conference of the reinsurance industry in Monte Carlo, Monaco, last week.

     

  • Partner Nollywood, insurers urged

    For Nigerians to imbibe insurance culture, operators need to partner the entertainment industry called Nollywood, an expert, Nnamdi Duru has said.

    He said the partnership could drive the desired insurance culture and deepen insurance penetration in the country.

    He gave this advice while speaking on “The media and the promotion of insurance culture in Nigeria” at the just-concluded insurance industry Joint Media Retreat for Journalists in Abeokuta, Ogun State.

    He said the media, broadly classified into print and electronic, could be further classified into books, magazines, newspapers, recording, radio, television, online, social media as well as the new and emerging information and communication platforms.

    The music and entertainment industry in Nigeria falls into recording, television and radio conveniently, he said.

    He said while the traditional media including print, television and radio have been able to boost insurance awareness, there is need for the industry to also engage other media to drive the desired change in culture in favour of insurance.

    He noted that members of Nollywood have the greatest followership in the country today, saying they could be mobilised to work for the industry.

    He said: “The insurance industry should partner Nollywood to drive the desired insurance culture in Nigeria. Entertainers have great number of fans among Nigerian children, youths, middle class and the elite. These are the target groups for the insurance industry.’’

     

     

  • Deposit insurers plan new guidelines

    The International Association of Deposit Insurers (IADI) is preparing new guidelines on deposit insurance as it launches public consultation for its “Revised Core Principles for Effective Deposit Insurance Systems”, which will be known as core principles.

    The revised core principles are expected to be finalized by the end of 2014.

    In 2013, IADI established an internal Steering Committee to review and update the core principles and develop a set of proposed revisions.  As part of its review mandate, the committee took into account the experience gained in using the core principles for jurisdiction self-assessments and significant developments in the regulatory landscape such as the development of the Financial Stability Board (FSB).

    It also considered key attributes of effective resolution regimes; and enhanced guidance developed by IADI to address recommendations resulting from the FSB Thematic Review on Deposit Insurance.

    The IADI Steering Committee had presented its proposal to a Joint Working Group (JWG) comprised of IADI’s international partners including the International Monetary Fund, World Bank, European Forum of Deposit Insurers, Financial Stability Board, European Commission, and Basel Committee on Banking Supervision. The JWG used that proposal as a starting point to develop the final revised core principles.

    President, International Association of Deposit Insurers (IADI), Jerzy Pruski, who doubles as president of the management board, Bank Guarantee Fund of Poland noted that the revised version is a product of outstanding collaboration among our international partners and seeks to achieve the right balance between raising the bar for more effective deposit insurance systems and retaining the core principles as a flexible, internationally applicable standard.

    The global financial crisis of 2007-09 brought to light significant policy lessons for deposit insurance systems. These lessons have important implications for the Core Principles, originally released in 2009, and have provided the context for revisions.

  • Insurers tackle aviation agencies on encroachment

    Insurers tackle aviation agencies on encroachment

    • Urge NAICOM on challenges

    Insurers have criticised moves by the Nigerian Civil Aviation Authority (NCAA) and other government agencies under the Ministry of Aviation to provide insurance to passengers and public liability for nuclear risks.

    Describing it as an encroachment, they said this was how the health insurancce, pension and the workmen’s compensation scheme were ceded to other bodies, thereby denying the industry the right to prospect.

    The insurers under the umbrella body of the Nigeria Insurers Association (NIA), spoke through their Chairman, Mr. Remi Olowude at an interactive session between the Board Members of the National Insurance Commission (NAICOM) and some chief executive officers of insurance firms. The event was organised by the commission.

    Olowude listed the National Health Insurance Scheme, (NHIS), the National Pension Commission (PenCom) and the National Social Insurance Trust Fund (NSITF) as new bodies holding sway in businesses that should be administered by insurance firms.

    He also criticised the government’s nonchalant attitude to paying premium, restriction on investments and recognition of offshore investments, insurance of oil and gas imports, and enforcement of compulsory insurance.

    He said other issues that bother them include the gradual dominance of foreign investors in the industry, unwillingness by the government to bail out firms that lost huge assets as a result of the financial meltdown and crash of the stock market, multiple taxation of insurance firms by various tiers of governments.

    Olowude, who is also the Executive Vice Chairman, Industrial and General Insurance Plc (IGI), said  NCAA was planning to establish a fund for passengers’ liability.

    He said all over the world, aviation passengers’ liability is subject to international conventions and the risks are covered by conventional insurance policies, noting that Nigeria cannot be an exception.

    He added that the Nuclear Agency also wants to establish a fund for nuclear damage insurance, instead of seeking cover for risks, which are covered in the international market.

    Oluwode stressed the need for the government to pay premium promptly.

    He said: “The government and its agencies have been paying lip service to the importance and benefits of insurance without serious patronage and support. There is hardly sufficient budget provision for payment of premium by government and its agencies.

    “Therefore, when insurance services are patronised, payment of the premium becomes an issue, a clear negation of the provisions of the law on ‘No premium, No cover’. Some parastatals or enterprises are funded without allocation for insurance. Many insurance policies contracted by the MDAs in the past were not renewed, thus leaving the assets exposed to risk, damage and losses without protection.

    He said there was an urgent need to review the restriction on investment to ensure safe, but adequate returns to stakeholders for the viability of the industry. Investments on equities suffered losses in 2008 and 2009, yet insurers are expected to maintain the same proportionate level of investment in prescribed sectors.’’

    He called for an amendment to the provisions of Insurance Act 2003 and Regulation of insurance company investments in line with the realities of business, adding that NAICOM needs to review its position on off-shore investment for solvency calculation and actuarial valuation, which he said, is under discussion with the Commissioner and his team.

    On the insurance of oil and gas imports, Olowude said there was the need to activate the various laws relating to marine insurance of refined petroleum products imported.

    “The Insurance Act 2003, for instance, provides that all imports must be insured with an insurance company registered in Nigeria. This law is only observed in the breach. Consequently, we are seeking enforcement of the Cabotage Act 2003, review of the Insurance Act 2003 and the Nigerian Oil Industry Content Development Act 2010.

    “We have also observed the gradual dominance of foreign investors in the market. Although Direct Foreign Investment (DFI) is in the interest of the economy, we want to believe that the foreign investors are not placed at an advantage over their Nigerian counterparts. We welcome foreign investors provided that there is a level playing field for all.

    “Also, many institutions and enterprises benefited from bail out plans by their governments after the economic crises and financial meltdown of 2008. In Nigeria, the banking industry, aviation and manufacturing industries benefited from the bailout by the Federal Government. Many insurance firms are still groaning from the losses suffered as a result of the crash in the stock market.

    “Recovery has been difficult and returning to profit remains a herculean task. We appeal to the Federal Government through your good offices to look towards the direction of insurers in this regard, Oluwode added.

    NAICOM Chairman, Hon Chibudom Nwuche, said the event was aimed at providing a platform for exchange on the performance of the industry, and to brainstorm on areas requiring urgent attention for improvement and mutual support.

    He said the thrust of the Commission’s activities is to support the Transformation Agenda of the Federal Government, providing an appropriate regulatory framework for insurance institutions.

    He said the sector is a very important, and trhat it must be properly regulated to enable it to play a pivotal role in the economy.

    He said: “We are not unmindful of the fact that there are, indeed, some challenges encountered by you in the course of doing your business. But you will agree with me that while some of these challenges are certainly beyond your immediate control, a lot of the challenges are self-inflicted. So, the onus is really on you to address these challenges.

    “On our part, we will go and critically look at some of the challenges you have highlighted to provide solution to all the problems.But we will continue to resolutely support the resolve of NAICOM’s management to ensure effective supervision of the industry in order to protect policyholders and Government Strategic Assets.’’

    He continued: “While NAICOM continues to operate within confines of all extant laws, all practitioners in the sector must operate with the rules and internal norms as a means towards deepening public trust and enhancing contribution to the nation’s Gross Domestic Product (GDP).

    “In carrying out this statutory responsibility, I must emphasise that there should be no one, or group to be excluded from compliance with the rules and regulations.Indeed, there shall be no sacred cows, as nobody will be allowed to be above the laws.’’

  • ‘There’s no feud between insurers, PFAs’

    ‘There’s no feud between insurers, PFAs’

    Pension Fund Administrators (PFAs) have said there is no feud between them and insurers, despite allegations of de-marketing levelled against some members on the sale of Programme Withdrawal (PW) and Life Annuity sold by the duo.

    The Pension Managers, who spoke under the auspices of the Pension Fund Operators Association of Nigeria (PeNop) at a briefing in Lagos, said they are looking at areas of collaboration and work as partners, and not as competitors.

    Programme Withdrawal (PW) is a product offered by PFAs and regulated by the National Pension Commission (PenCom) while annuity is offered by life insurance firms regulated by the National Insurance Commission (NAICOM).

    Under the PW pension is paid over an expected lifespan until the Retirement Savings Account (RSA) balance runs out. Whenever the retiree dies, the beneficiary under a will, or Letter of Administration, is paid enbloc the balance in the RSA.

    Life Annuity, on the other hand, pays pension for life with a minimum guaranteed payment period of 10 years. If the retiree dies within the guaranteed payment period of 10 years, the surrender value of the remaining amount within the period shall be paid as lump sum to the estate of the retiree or named beneficiary.

    The issue of de-marketing over the products has caused tension between the pension managers and insurers in the past. The insurers complained that PFAs were discouraging retirees and pensioners on their lists from buying life annuity products, alleging that some of them spread lies about annuity products and make wrongful insinuations about the safety of life annuity funds.

    On the other hand, the PFAs were, however, not happy that PenCom is collaborating with the National Insurance Commission (NAICOM) to promote life annuity as an alternative to programmed withdrawals as prescribed by the Pension Act. Some also believe insurers do not act professionally in their bid to make the retirees buy their product.

    PeNop Chairman, Mr. Misbau Yola, said at the event that insurance firms accused marketers of misinforming retirees about either procuring programme withdrawal or annuity.

    He explained that they are required to inform the retirees at the point of retirement on the option available to them, saying but it is up to the retiree to decide which option to take.

    He said: “After we give this information to the retirees, they think about it and take their decision. Unfortunately, the insurance marketers believe that because we are the ones that interface with these retirees, we sell our own product rather than theirs.

    “But, of course, we are not to specifically sell their product, but we will not de-market their product and we actually do not do that. A lot of retirees have been moving from our own product which is the PW to life annuity. Those who choose annuity and subsequently discovered they would be better off with Programme Withdrawal, cannot come back because they are not allowed to do so based on how the product is structured. PW withdrawal, on the other side, is flexible and retirees can decide they want to change to annuity.

    “As an association, we are fervently looking at possible ways of how we can understand ourselves better so that they can actually understand that we are partners in progress and not competitors in this regard. We, as an industry, do not de-market the annuity option. The relationship is cordial, all we do is advise the retiree on available options to think and make a choice.”

    Section 4 of the Pension Reform Act, 2004 provides that an employee can on retirement, make withdrawals from his Retirement Savings Account (RSA) in the form of a programmed monthly or quarterly withdrawal based on his life expectancy or buy life annuity from a life insurance firm.

    Yola said the retiring worker can withdraw a lump sum from the balance in his RSA provided that the amount left in the account after the withdrawal is enough to fund a life annuity, or programmed withdrawals of not less than 50 per cent of his annual remuneration at the date of retirement.

    Also, a retiree, who had opted for programmed withdrawal is free to change to life annuity, using the balance in his programmed withdrawal account to buy life annuity from a life insurer but he cannot change from life annuity to programmed withdrawal, he added.

  • Insurers set agenda for new NCRIB chief

    Operators have urged the new President of the Nigerian Council of Registered Insurance Brokers (NCRIB), Mr Ayodapo Shoderu, to uplift insurance broking.

    Some underwriters said they were confident that he would sustain the tempo of activities in the industry.

    Deputy Chairman of the Nigeria Insurers Association (NIA), Mr Gus Wiggle, said there was hope that the achievements recorded by the council would be sustained under the Shoderu.

    He spoke during a valedictory visit of the immediate past president of the Council, Laide Osijo, to the association.

    He promised that the NIA would continue to collaborate with the Council to ensure a robust sector.

    He said he was confident in the new president considering his robust professional pedigree and integrity, adding that Shoderu is a renowned figure in the sub-sector.

    Similarly, the President of the Chartered Insurance Institute of Nigeria (CIIN),   Mr Fatai Lawal, was also optimistic that the industry was soon witness development.

    He described Shoderu as one of the respected professionals in the sector who has practised for over 35 years in both the country and the United Kingdom (UK).

    Shoderu identified synergy with relevant institutions as one of his major assignments.

    He said: “Since no professional body could operate in isolation,my administration will open new vista of relationship with relevant insurance institutions, both within and outside the country.

    “I like to affirm that the Council’s cordial relationship with the National Insurance Commission (NAICOM), and other bodies like the CIIN, ILAN and NIA is non-negotiable.”

  • IAIS to help identify global systemically important insurers

    A panel from the global insurance supervisors, the International Association of Insurance Supervisors (IAIS), has focused on the association’s recent work to help identify global systemically important insurers and develop policy measures that apply to them.

    This was made known at the just- concluded 20th Annual Conference of the IAIS which gathered more than 600 members, observers and interested parties in Chinese Taipei for two days of lively discussion.

    The annual conference provides a forum for insurance supervisors to strengthen commitments, share insights and develop new mechanisms to work together. It also provides stakeholders with insights into the on-going work of the IAIS and the future direction of insurance supervision.

    Peter Braumüller, Chair of the IAIS Executive Committee said they are glad to have been able to welcome over 600 supervisors, government officials and insurance professionals for two days of lively discussion and debate on many issues of critical importance within the insurance sector.”

    He stated that with the theme of the conference, ‘Building Sustainable Insurance Supervision in a Changing World’ panels on the ageing of populations were included.

    According to him, this is to help understand potential opportunities and challenges, this panel examined what implications the ageing of populations will have for insurance markets, pension systems and the macro-economy.

    The panel discussed how to implement most effectively the new Coordinated Implementation Framework, including an increased regional focus, and whether there are certain basic requirements that the IAIS should assist all jurisdictions to put in place.

    He said: “Panelists also discussed the A2ii’s new strategic direction and how our partnership will assist IAIS Members implement the Insurance Core Principles in a proportionate manner that creates a path toward increased access to insurance.

    “Once in place, ComFrame will allow supervisors to efficiently and effectively cooperate and coordinate by providing a basis for comparing regulatory and supervisory processes of internationally active insurance groups. As one of the IAIS’ most significant projects, focus was given to ComFrame’s status and the next steps in its development and field testing.

    Other issues discussed according to him are the impacts of global climate change and Consumer protection frameworks and guarantee funds and Consumer protection frameworks and guarantee funds..

    “Panelists discussed matters such as how to improve catastrophic risk management and enhance risk diversification through cross-border cooperation.

    This session focused on the variety of consumer protection frameworks and approaches to guarantee funds, how these funds operate in jurisdictions around the globe and the role of these frameworks and funds in the overall approach to insurance supervision and consumer protection, especially as part of effective resolution?

     

    •Culled from the Telegraph

     

  • Indigenous insurers fret over influx foreign operators

    More foreign underwriters are coming to the industry through mergers and acquisitions while the indigenous companies are bracing for synergies to meet recapitalisation that is aimed at boosting competition, writes Omobola Tolu-kusimo. 

    A  new dawn is set in the sector following the influx of global insurers acquiring indigenous players.

    The foreign investors have discovered how they can thrive where the indigenous firms seem to have failed in deepening insurance penetration, thereby posing a competition to indigenous operators.

    The ban by the Federal Government on the issuance of new licences to investors has also had its impact.

    Minister of State for Finance, Dr. Yerima Ngama, who made the pronouncement in Abuja during the inauguration of the new board of the National Insurance Commission (NAICOM), said rather than issue fresh licences, any investor desiring to own a firm should acquire existing companies.

    He said the new investors will be able to recapitalise them and start running the companies well.

    He noted that there are many distressed companies, arguing that it is either the regulator liquidates them or get some serious people to take them over.

    He said: “So, there is no need to issue new licences when they have several licences to take over. It is just like the banking system, if we have so many distressed banks, why should we issue a new licence to a bank? Why not buy one of the distressed ones and restructure it?

    “That is why the sector does not have a single distressed bank. So, the same thing should apply to insurance; we have so many of them. Anybody who is interested in investing in them is welcome to buy two or three of these distressed insurance companies, merge them, recapitalise them and run them.”

    Ngama also urged NAICOM to step up its regulatory duties as the government had already initiated several reforms that would help to make the sector stronger.

    Before now, insurers were doing business in their comfort zones, not minding its slow pace of growth and insignificant contribution to the Gross Domestic Product (GDP).

    Last year, the sector generated less than N300 billion premium income instead of the N1trillion target set for it by NAICOM.

    After the consolidation about eight years ago, life, general and re-insurance companies’ minimum capital increased from N150 million to N200million, N350million to N2billion, N3billion and N10billion.

    There are 57 insurance and two re-insurance firms in the country. Some of these have, however, been either merged or acquired.

    In the light of the low performance of the less than one per cent contribution of the sector to the economy, the foreign investors are eager to partake in the domestic market because of its huge population of about 167 million and vast untapped underwriting business.

    So far, Old Mutual, one of Africa’s biggest insurers with headquarters in the United Kigdom (UK) is here to set up shop. The firm provides life assurance, asset management, banking and general insurance to over 14 million customers in Africa, the Americas, Asia and Europe. It started in South Africa.

    Last year, Assur Africa Holding, a consortium of three European Development Finance Institutions (DFIs) and two Private Equity (PE) firms acquired 67.68 per cent shareholding in GTAssure, now Mansard Insurance Plc. The DFIs are Netherlands Development Finance Company (Holland); German Investment Corporation (Germany) and French Development Finance Company (France), while the two Private Equity Firms are Development Partners International, based in the UK, and Africinvest existing shareholder based in Tunisia.

    Also, Group NSIA, a company based in Abidjan, Cote d’Ivoire bought 96.15 per cent equity of Diamond Bank Plc in ADIC Insurance Company Limited.

    Law Union and Rock Insurance Plc also had its share of foreign mix when 60 per cent of its controlling shares were acquired by a consortium comprising Alternative Capital Partners (ACAP) and Swede Control Intertek Limited.

    Sources said a strong management team with a track record was put together by the new core investor to work with external consultants.

    According to the source, the new core investor has already set a target of being among the top five insurance companies by the end of 2015.

    UBA Metropolitan, a subsidiary of United Bank for Africa, has a South African presence from Metropolitan Life, while FBN Insurance Limited, a subsidiary of FirstBank of Nigeria Plc also has strong presence of South African Investors, Sanlam Group.

    Determined not to be left out, indigenous firms in the local market are rooting strategically. Custodian and Allied Insurance Plc, one of the top players, have merged with Crusader (Nigeria) Plc having secured the nod of their shareholders through the court.

    Also, Cornerstone Insurance and Fin Insurance seem to be warming up while AIICO Insurance and Linkage Assurance are also mulling mergers and acquisitions.

    According to the Nigeria Insurers Association 2011 Insurance Digest, the long term call on the sector is supported by its demographic advantages and the economic prospects relative to other emerging markets.

    “Although a fast-rising bottom population base provides significant headroom for premium expansion, decades of poor insurance uptake exacerbated by widespread cultural aversion and the inefficiency of the micro economic parameters have slowed down the desired growth in the insurance sector.

    “However, if the various initiatives in the sector is sustained and strengthen, the insurance sector revenue will assume a positive dimension in the coming years,” it said.

    Group Chief Executive Officer, Old Mutual West Africa, Offong Ambah, said the economy is moving fast.

    According to him, the country offers significant growth opportunities and Old Mutual is banking on this.

    He said: “Old Mutual is in Nigeria as part of the group’s overall strategy to build a franchise in the West African sub-region.

    “Following our acquisition of Oceanic Life, we are in the final stages of acquiring the short-term insurance company, Oceanic General business, which enables us to provide a broad range of short term and life insurance products to the market.

    “Our objective is to work with existing insurance companies and regulator to broaden and deepen the insurance market in Nigeria. This we plan to do through the introduction of innovative products financial education reaching out to the underserved and un-served segment of the market tackling the sceptism of Nigerians regarding insurance through prompt settlement of claims and excellent service delivery among others.”

    According to him, Old Mutual has set aside R5billion ($600million) of capital to fund its expansion in East and West Africa.

    Managing Director, Cornerstone Insurance Plc, Mr Ganiyu Musa, said the company was looking at various opportunities available to it in its merger plans, adding that it would announce its plans soon.

    Managing Director, FBN Life, Mr Val Ojumah, said the sector will do better with large companies that can compete fairly well in the world insurance market.

    The retention capacity of the industry is low. Majority of the risks in the oil and gas, aviation and other high technology and high value risks are reinsured abroad.

    Chief Operating Officer, AIICO, TundeFajemirokun, said the company is considering merging.

    He affirmed that there is an influx of foreign investors in the market.

    He lauded the Federal Government for stopping the issuance of new licences, noting that existing companies need to team up.

    He said: “To cope with the ongoing competition, we are investing in our operations, technology, people and agency network.

    “There has been some strong influx of foreign investors in the insurance market and most of them have positioned themselves. For AIICO, we have had a lot of potential suitor that want to merge or even acquire us.

    ‘’Two years ago, we had agreement with shareholders to raise some money and we have been talking to investors. We have acquired before but sometimes there is need to be careful with acquisitions. Sometimes the company acquired most of the value and not the other way round; so, we are being careful about acquiring any company.”

    Fajemirokun agreed that insurance penetration was still low.

    ‘’The foreign investors believe they can improve on this and develop our products a lot better than they are today. We also have the National Pension Commission (PenCom) regulated annuity, which is a huge part of the market coming up,’’ he said.

     

  • Insurers fear increase in regulation cost

    Operators are apprehensive over plans by the Federal Government to stop allocation to the National Insurance Commission (NAICOM) from next year.

    They fear the regulatory body may increase levies and tighten sanctions and penalties to boost its Internally Generated Revenue (IGR).

    The major source of fund for the commission flows from the Insurance Special Supervisory Fund (ISSF) Decree 20 of 1989, which mandates insurance companies to contribute one per cent of their gross earnings to the fund.

    Aside from the allocations, NAICOM gets its income from the one per cent statutory levy imposed on insurance operators. This is imposed on the gross premium income of insurance and reinsurance companies, gross commission made by insurance brokers and gross fees earned by loss adjusters.

    It also generates income from investments and loans from sources approved by the board, fees and penalties paid by insurance institutions, local and foreign grants.

    Deputy Chairman, Nigeria Insurers Association (NIA), Mr. Godwin Wiggle, who spoke with The Nation, believes the aim of the Federal Government to stop allocations to NAICOM is to partly grant it the autonomy it asked craved for.

    Wiggle however, hopes the commission will not seek to generate more income by reviewing the one per cent commission it charges operators in the industry.

    He said: “My fear is that the commission may want to look at increasing the one per cent commission paid by operators as this can affect insurance business. As a supervisory arm of government, it is entitled to foreign grant hence I believe there are other ways it can generate income.

    “In the event the commission increases it, the Insurance Act has to be amended. But I want to look at the development positively. I feel that government in its wisdom wants to grant the commission part of the autonomy it has been craving for, which will give it the opportunity to widen its supervisory role.”

    Former President of the Chartered Insurance Institute of Nigeria (CIIN), Mr Wole Adfetimehin, said that going by his research, government is used to taking decisions based on trial and error.

    He said he does not support the decision by the government to stop budgetary allocation to NAICOM as it will be an added cost on operators.

    “What this simply means is a review of the commission percentage that we pay to NAICOM and this will affect overheads of companies. “This is a sector that we have been trying to grow and I wonder why they are comparing us with the banking sector.

    “How many of the government parastatals have paid their premium this year. It is only the Nigerian National Petroleum Corporation (NNPC) that has fully paid and this is because it has the capacity to do so on its own,”he said.

    President, Nigerian Council of registered insurance Brokers (NCRIB), Olaide Osijo, said members of the Council have been calling her to express their fears but she has told them not to be apprehensive or speculate about how NAICOM will generate its income.

    But in case their fears come to light, she said that insurance in Nigeria has gotten to a stage that NAICOM does not do anything without consulting the sector.

    She noted that the various stakeholders in the sector, including, the Nigeria Association of Insurers (NIA), CIIN and NCRIB, had come together to form the Insurance Industry Consultative Committee (IICC) to fight their cause.

    Two weeks ago, the Federal Government said it would halt allocations to NAICOM from 2014, admonishing the newly inaugurated board and management to evolve innovative ways of boosting its IGR.

    Minister of State for Finance, YerimaNgama, said the commission has come of age.

    “From time to time, the government supports the commission as its internally-generated revenue grows. But today, the industry has grown and is healthy; we believe that as from next year, NAICOM, just like the Central Bank of Nigeria and the Nigerian Deposit Insurance Corporation (NDIC), should be able to generate enough internal revenue to embark on their activities without any budgetary support from the federation account,” he said.