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Tag: NAICOM

  • Recap: NAICOM seeks palliatives from NSE, others

    Ahead the recapitalisation of the insurance companies, the National Insurance Commission (NAICOM) has started engaging with stakeholders to ensure a hitch-free exercise, reports Omobola Tolu-Kusimo.

    The National Insurance Commission (NAICOM) is engaging other relevant regulatory bodies and agencies of government in the financial services sector for palliatives that will reduce the cost of recapitalisation on companies, the Acting Commissioner for Insurance, Mr. Sunday Thomas, has said.

    Thomas, who spoke with reporters, said the response from the relevant regulatory bodies and agencies, which include the Nigerian Stock Exchange (NSE), was good.

    He said the exercise was going on smoothly and that the Commission would do all that is necessary to make it a success.

    He said insurance firms have submitted their recapitalisation plans and it has been good.

    He urged sustained efforts by the firms at earlier completion of the plans.

    He expressed satisfaction that at the end of the exercise, the industry would have been transformed.

    He reiterated that with a contribution by the industry to the nation’s Gross Domestic Product (GDP) at less than one per cent, it has underperformed its potential, especially when compared with other sectors in the financial services industry.

    He said: “In the last few years, the insurance industry has witnessed series of changes owing to reforms embarked upon by NAICOM. These reforms include financial reporting, No Premium, No Cover, Corporate Governance Code, Risk Based Supervision, Information Communication Technology advancement, Financial Inclusion, Claims Settlement, Market Conduct, Expansion of Distribution Channels, Recapitalisation with all aimed at building confidence, trust and enhancing our market value and profitability.

    “The Commission shall continue to introduce new reforms and initiatives in line with international best practices in our march towards achieving the full potential of the industry. I believe that once we can successfully navigate this corner, we could be on our way to entrenching a financially solid, vibrant, viable and active insurance market that would bring about not only an increase in penetration but a substantial increase in the industry’s contribution to GDP.

    “They will also simulate accumulation of long-term funds for infrastructural financing, job creation, and an improved Return on Investment.

    “It is long overdue that we make changes in the right direction. Successful economies are characterised by a strong investment culture of which the insurance industry plays a vital role. So we literally need to re-energise the insurance industry and commence playing our key roles in boosting and growing the sector.’’

  • Financial Inclusion: NAICOM, PenCom move to capture 36.6m Nigerians

    Following plans to meet its financial inclusion target, the Federal Government has restated the desire to capture over 36.6 million Nigerian adults, representing 36.8 per cent of the working population through the micro segment of insurance and pension sectors.

    The figure includes self-employed Nigerians that are yet to officially embrace any form of financial services product.

    Speaking at the 4th National Insurance and Pension Correspondents (NAIPCO) National Conference in Lagos State, stakeholders in both sectors said majority of Nigerians in the informal sector were yet to be aware of the numerous benefits in embracing financial services products.

    To ensure that every Nigerian have access to financial services, they said the Federal Government came up with micro insurance and micro pension products to penetrate the grassroots and also get to those not currently registered in the Contributory Pension Scheme [CPS] nor covered by any form of insurance.

    To achieve the agenda, the Acting Director General, National Pension Commission (PenCom), Mrs Aisha Dahir-Umar, said the commission planned extending pension coverage to 30 million contributors by 2024, thereby ensuring that 40 per cent adult Nigerians are covered under the CPS.

    Dahir-Umar, who was represented by the Head, Benefit Administration Unit, PenCom, Babatunde Philips, said President Mohammadu Buhari, in March, 2019, launched the micro pension scheme to provide the informal sector with a veritable means of securing old age income.

    She said implementation of the Micro Pension Plan (MPP) would yield positive results for Nigerians and the pension industry, adding that it would assist greatly in reduction of old age poverty in the country.

    According to her, “the commission has put in place requisite infrastructure to facilitate seamless implementation of MPP. The Enhanced Contribution Registration System (ECRS) has been deployed to facilitate seamless operations of the MPP. This system has so far aided the smooth registration of micro pension contributors.”

    She also applauded the media for consistent support, saying it had assisted the commission in recording modest achievements in educating and enlightening the public on the workings of the CPS and the commission’s activities.

    Speaking in the same vein, the Acting Commissioner for Insurance, Mr Sunday Thomas, said the National Insurance Commission (NAICOM) had been doing a lot in terms of financial inclusion in the past eight years.

    The acting commissioner, who was represented by the Director, Governance Enforcement and Compliance, Leo Aka, said it required collective efforts to ensure that Nigerians in the informal sector embrace financial services.

    Looking at the demography of Nigeria, Thomas said one would notice that unemployment rate in Nigeria was quite high, adding that this was a signal that the industry needs to move fast to capture the people in the informal sector.

    He said the insurance commission had issued some guidelines to ensure that those not in the formal sector embrace financial services.

    Thomas added that while establishing the micro insurance guidelines, the commission ensured that the micro insurance products are very simple, easy to understand, affordable, valuable in that it should be able to address needs and remain efficient.

  • NAICOM gives wake-up call to directors

    The National Insurance Commission (NAICOM) has given a wake-up call for board directors, saying the low level of corporate governance oversights in the insurance sector remains worrisome.

    The Acting Commissioner for Insurance, National Insurance Commission (NAICOM)  Sunday Thomas, who spoke at the Conference for Directors of Insurance Companies at Oriental Hotel, Lagos, said the failure of corporate governance in the  past, has played a prominent role in the death and distress of most corporate organisations the world over, including Nigeria.

    He said NAICOM would continue to introduce new reforms and initiatives in line with international best practices in its march towards achieving the full potentials of the industry, saying the industry has under performed in Nigeria, given its potential, and the fact that its contribution to the nation’s Gross Domestic Product (GDP) at less than 1 per cent, was abysmally low especially when compared with other sectors in the financial services industry.

    Thomas said he was convinced that once “we can successfully navigate this corner, we could be on our way to entrenching a financially solid, vibrant, viable and active insurance market that would bring about not only an increase in penetration but a substantial increase in the industry’s contribution to GDP,” adding that this will also simulate accumulation of long-term funds for infrastructural financing, job creation and an improved Return on Investment (ROI).

    He said: “It is long overdue that we make changes in the right direction. Successful economies are characterised by a strong investment culture of which the insurance industry plays a vital role. So we literally need to re-energise the insurance industry and commence playing our key roles in boosting and growing the sector.

    “The position of the Board of Directors is key in achieving a high level of efficiency in an institution’s corporate governance structure. Over the years, the Commission has made attempts at entrenching good corporate governance culture in the insurance sector. The development and issuance of Corporate Governance Code in 2009 and the Market conduct guidelines in 2014 are among efforts of the Commission in this direction’’.

    Thomas said there was need to emphasise that the primary role of the board, either in a private or public entity remains “the oversight of management to ensure that corporate goals, vision, mission and values of the entity are strictly upheld at all times. The board is also expected to ensure the financial soundness and general well-being of the organisation by monitoring the management to guarantee effective and efficient deployment of human and capital resources for the overall benefit of all stakeholders. The observance of this role has been lacking in some of our companies and that has contributed in no small measure to the challenges facing  them today.

    “It is our firm belief that members of the board can effectively perform their roles without necessarily interfering in management functions. It is the desire of the Commission to work with all stakeholders, including members of the Board of Directors to reverse this trend. It is imperative for me to remind the directors that their companies are in the business of insurance primarily to settle genuine claims made by policy makers. In all policy formulations of the board, I am appealing that the prompt settlement of claims be given  high priority,” Thomas said.

  • NAICOM to insurers, reinsurers: submit your recapitalisation plans

    The National Insurance Commission (NAICOM) has directed insurance and reinsurance firms to submit their recapitalisation plans to the Commission by August 20.

    This is coming as the deadline for firms to meet up with the commission’s directive to increase their capital narrows from 13 months to nine months.

    In May, NAICOM increased the minimum paid-up share capital of a life insurance firm to N8 billion, non-life N10 billion and composite insurance firms N18 billion and re-insurance firms N20 billion, up from N2 billion, N3 billion, N5 billion and N10 billion.

    NAICOM, in the new circular to all firms dated July 23, entitled Re: Minimum Paid Up Share Capital Policy for Insurance and Reinsurance Companies, and signed by the Director, Policy & Regulation Directorate, NAICOM, Pius Agboola, stated: “Insurers and Reinsurers shall submit their recapitalisation plan to the Commission on or before 20th August, 2019.

    “The plan should include a capital status of the company based on the above-referenced circular as at the last audited financial statements; Board resolution on how to comply with the directives; and detailed action plan on how the funds for the recapitalisation are to be sourced with timelines and deliverables.

    “Also companies intending to seek funds from the capital markets are required to submit their plan of action on a file-and-use basis while companies that intend to merge or acquire another should submit their proposal after which they must comply with sections 30 and 31 of the Insurance Act 2003.’’

    It continued: “The commission shall review and provide responses on the submitted recapitalisation plans on or before September 17. The review may require meeting with the Board and Management of each of the insurance company on its recapitalisation plan.

    ‘’Similarly, the Commission is engaging with other regulatory bodies for possible palliatives in addition to those being considered by the Commission.’’

  • ‘Operators ‘ll support NAICOM on recapitalisation’

    With the wind of recapitalization blowing in the insurance industry, operators will support the National Insurance Commission (NAICOM) to grow the sector, the Chairman of the Insurance Industry Consultative Council (IICC), Mr. Eddie Efekoha, has said.

    Efekoha, who is also the Chairman, Chartered Insurance Institute of Nigeria (CIIN) and Managing Director, Consolidated Hallmark Insurance Plc, spoke at the 2019 IICC Media Retreat in Ijebu Ode over the weekend.

    While applauding NAICOM for setting a new pace of recapitalization in the financial sector, he assured that operators will not go against the regulator because the consequences are too grievous.

    He said shareholders seem not happy with the recapitalization requirement, but there is a limit at which operators can control other stakeholders like the shareholders and investors.

    He said that while they cannot stop them from speaking their minds, whatever they have said do not represent the operators’/managers’ decision.

    He said:“The wind of recapitalization is blowing. We recently heard that Ghana insurance industry has commenced recapitalization and the Central Bank of Nigeria (CBN) just last week also came up with its own plan. I think the NAICOM should be commended for setting the pace.

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    “I can assure you that as operators, we will not go against our regulator because the consequences of that are too grievous. However, there is a limit to which operators can control other stakeholders like the shareholders and investors. We cannot stop them from speaking their minds, but whatever they have said do not represent the operators’/managers’ decision.

    “The reasons NAICOM gave for the recapitalization exercise are the same reasons CBN is giving which are the issues of exchange rate and capacity. If these are the main reasons for the recapitalization exercise, the truth of the matter is that the exchange rate that applied in 2005 to 2007 is not the same in 2018 and 2019. Secondly, if the exchange rate has changed, our ability to retain businesses has weakened. Should we enhance it? The answer is yes.”

    In the same vein, the president, Institute of Loss Adjuster of Nigeria (ILAN), Alhaji Femi Hassan, said ILAN is excited about the recapitalization to take place.

    “We are eagerly waiting for it to take place, because it will enable the operators to put some structures in place that will help to grow the industry. I know the operators want this recapitalisation to take place, but the investors who have put their money into the insurance companies are the ones kicking against it, but nevertheless, I am optimistic that in the long run, every party will see reason”, he added.

  • Shareholders threaten to sue NAICOM over recapitalisation

    Following upward review of minimum paid-up share capital of insurance companies by the National Insurance Commission (NAICOM), some shareholders have threatened to drag the regulator to court again.

    The shareholders who appeared visibly shaken and furious yesterday said they woke up to a rude shock of recapitalisation order of the regulator.

    They threatened to sue the commission again if it attempts to enforce the review on insurance companies, just as they did when they drag it to court on the Tier Based Solvency Recapitalisation policy.

    NAICOM on Monday gave a 13-month ultimatum to insurance companies recapitalise or lose their licences.

    Read also: NAICOM approves Casava as microinsurance firm

    The ultimatum, which became effective from Monday, raised the minimum paid-up share capital of a Life insurance company from N2 billion to N8 billion; Non-Life insurance from N3 billion to N10 billion and Composite insurance from N5 billion to N18 billion. Re-insurance companies were directed to raise their capital base from N10 billion to N20 billion.

    President, Independent Shareholders Association of Nigeria, Mr Sunny Nwosu condemned the actions of the commission.

    Nwosu said he was extremely sad to hear in the news yesterday morning that insurance companies should recapitalize to the huge capital required.

    “We went to court when they came up with the tier-based recapitaliastion and defeated them, only for them to come back with another plan,” Nwosu said.

    Comrade Lawrence Okusehin from Ibadan expressed fear over NAICOM’s decision.

     

  • NAICOM approves Casava as microinsurance firm

    The National Insurance Commission has granted approval to Casava Microinsurance Limited to operate as a State Composite Microinsurance Company transacting Life and General Micro insurance Business in Lagos State only.

    This was made known by NAICOM spokesman, Rasaaq Salami in a statement made available yesterday in Lagos.

    According to the statement, Casava Microinsurance Limited is one of the successful companies among several applications that received approval and license to operate.

    “Casava Microinsurance Limited is one of the successful companies among several applications received in the Commission from individuals and corporate entities requesting registration as Microinsurance operators in Nigeria.

    “The company thus becomes the second full-fledged standalone Micro Insurance Operator in Nigeria,” it stated.

  • NAICOM reiterates insurers’ role in adopting IFRS 9

    As insurers grapple with preparing their 2018 financial results in compliance with the new account standard, the International Financial Reporting Standard (IFRS) 9, the National Insurance Commission (NAICOM) has continued to senstitise them on how to have a seamless transition.

    The commission made this known during a media session on IFRS 9 with reporters in Lagos.

    The Director, Inspectorate, NAICOM, Mr. Barineka Thompson, said the key aspects of IFRS 9 is that it is a forward looking impairment assessment model for financial assets.

    He said it is also a simpler and clearer classification, recognition and measurement rule while hedge accounting will be linked to the entity’s risk management framework.

    He added that changes in own credit risk are to be recognised in other comprehensive income, reducing volatility in the profit or loss account.

    He pointed out that for the operators to have a seamless transition, they need to embark on awareness training for senior management and members of the board of directors.

    He said: “They need to develop roadmap for adoption and follow follow-up action; develop policies, procedures and governance structure for implementation; and perform an impact assessment to determine the high level implications of applying the new C&M requirements, including potential accounting mismatches and resulting volatility of IFRS 9and 17. They need to carry predominance test and present result to the board of directors for decision on choice of option; classification and measurement (‘C&M’) of financial assets assets– changes to IAS IAS39 categories with new tests/criteria tests/criteria to be met; develop, test, apply and validate new impairment model based on expected credit losses rather than incurred losses; appraise new hedge accounting criteria, expected to be of limited interest to insurers.

    “Furthermore, we expect them to address organisational responsibilities aligning actuaries, risk and accounting identify, shared risk and actuarial data; conduct parallel testing and pilot phases for increased efficiency; IT architecture and infrastructure harmonisation for valuations and impairment calculations; new presentation and disclosure requirement. They also have to consider interpretation of new requirements and assess implications of having to apply new impairment rules to all financial assets other than equities.

    “They must assess need to collect, verify and store credit data not currently used. Insurers should already have prepared themselves for IFRS 9 before January 1, 2018 against year-end financial statements and if relevant, have performed and concluded all testing and disclosure requirements. The tax impact of any accounting decisions, judgements and transitional adjustments arising from IFRS 9 will need to be understood and assessed alongside those arising from IFRS 17 to fully understand the overall impact, including on tax profile and volatility while they also file relevant report with the regulator for review and assessment”, he noted.

  • Insurance crucial to economic development, say experts

    Governments at all levels, corporate entities and individuals need to embrace insurance for economic development, National Insurance Commission (NAICOM) Director, Rasaaq Salami, has said.

    He spoke during the launch of AXA Mansard Insurance Television Commercial (TVC) for Life Insurance products at the weekend in Lagos.

    The event titled: Role of insurance in economic development was attended by some experts.

    Stressing the important role of insurance in economic development, he cited recent incidents of collapsed buildings across the country.

    He said it was unfortunate that the three-storey building in Ita-Faji area of Lagos Island, that killed 20 people, including pupils of a school and other people was not insured.

    He pointed out that if the building was insured, insurance would have compensated all victims of the disaster.

    He added that this explains the important role of insurance in an economy.

    He, however, called on operators to do more in awareness creation that will spur people to embrace insurance, noting that this is the direction that the commission as the regulator is going.

    Lauding AXA Mansard, Salami said the commission is proud of the company’s TVC on life insurance policies because it is about customers getting benefits while still alive

    He said: “We need to start doing more in our plans to create awareness and that is the direction that the commission is going. We urge everybody to endeavour to take up an insurance policy.

    “The commission is impressed with the commercial because we believe this is the direction that we should be moving in the industry. We have always had adverts or creatives that talk about disasters and deaths. This has scared the people away from taking insurance. We are proud of this advert that gives benefits while the insured is alive.”

    AXA Mansard Chief Executive Officer Mr Kunle Ahmed said the company’s life insurance products gave cash-back, healthcare ‘checks and loyalty bonus on its life products.

    He said they believed that life products should not just  be about benefits after the death of an insured but benefits to an insured while alive.

    Ahmed stated that the TVC was designed in their quest to improve the well-being of Nigerians, improve the uptake of life insurance policies and deepen insurance penetration.

    “The TVC promotes the importance and benefits of life insurance, focusing on living benefits. We believe that the TVC will bring about a paradigm shift in people’s understanding of life insurance being the first of its kind in the insurance industry. The TVC is also a testament to our desire to seek solutions that will increase insurance uptake in the country. We did a lot of research and we believe that life insurance penetration is still very low in Nigeria.

    ‘’Many people would buy the general policies like motor, home insurance, etc and would rather not buy life insurance. We think that this may have to do with the way the life products are presented to the public. This is why we came up with the TVC we have today and we believe through this effort, the perception that people have about life products will change for the better.

    “AXA Mansard was incorporated in June 1989. Within the 30 years of our existence, the name of the company has changed but we have remained the best in service standard. The company is a member of AXA Group, a world leader in insurance and asset management with 166,000 employees, 107 million clients across 64 countries in the world.”

    Nigeria Insurers Association (NIA) Director-General Mrs Yetunde Ilori affirmed that there is low awareness for insurance, especially life policies.

    “People only relate the policies to death but I think the AXA Mansard TVC, people will feel more excited to purchase insurance. On the part of NIA, we will use the media in sensitising the public on the benefits of insurance,” she added.

  • NAICOM issues IFRS 9 guideline

    The National Insurance Commission (NAICOM) has issued guideline for the implementation of International Financial Reporting Standards (IFRS) 9. This follows its adoption by both the regulator and operators.

    Its Deputy Commissioner, Mr Sunday Thomas who spoke to reporters in Lagos yesterday, said IFRS 9 provided significantly improved information because it introduced a structured approach to the classification and measurement of financial assets.

    Mr Thomas said accounts of insurance firms would become more transparent with the adoption of IFRS 9 for the preparation of financial statements by the insurance companies.

    Before now, the companies prepare their account with IFRS 4 accounting standard.

    He said many companies are already complying while some have already submitted their IFRS 9 compliant financial statements.

    He said four of the companies submitted early this week, noting that another five may have submitted yesterday.

    He said the guideline for the new accounting standard has been sent to the operators and sought for their views.

    “We have also engaged the CFOs of all companies where the director inspectorate engaged them.

    “Thereafter, we have invited the companies on one on one basis where they were requested to tell us how far they have gone in terms of implementation and challenges.

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    “The IFRS 9 came into the system as part of transparency in financial transaction. Since the 2008 crisis, relevant institution and regulators across the world became concerned of transactions within the financial services sector.

    “Based on this, the International Accounting Standard Board came up with some standards that will enable an ordinary person looking at financial recordings. With the adoption of IFRS 9, an ordinary person can have a better understanding and comparability of financial statements becomes a lot easier,” he said.