The Nation Newspaper

Tag: NAICOM

  • Over 13,000 agents not registered, says NAICOM

    About 70 per cent of insurance companies do not register their agents with the National Insurance Commission (NAICOM), The Nation has learnt.

    Investigation revealed that out of about 15,000 agents working for insurance firms, only 1,900 are registered. It was learnt that the agents were not registered because the insurance companies want to avert expenses charged by NAICOM on agents.

    A consultant with the National Insurance Commission, Yemi Soladoye, said only 30 per cent of insurance companies have registered their sales agents. He noted that the operators do so because they want their agents to perform before they can start paying huge fees on them. He urged insurers and brokers to train agents to deepen insurance penetration.

    He said: “The fact is that even the brokers need agents. I have been to a country where a broker has 3,000 agents. In Kenya, there is a bankassuarnce agreement between two brokers and two banks. What the brokers did was to appoint agents that sell insurance to customers of the bank. Agents can only sell a particular product of a particular underwriter, but a broker sells products of all underwriters.”

    Observers said agents are crucial link between the public and the insurer. Therefore, if they are well- trained, they could effectively play the role of an efficient intermediary between the insurer and insured in insurance transactions.

    He said unlike the insurance broker who is the agent of the insured, the insurance agent is the agent of the insurer who appoints him.

  • NAICOM, PenCom collaborate on annuity, group life policy

    NAICOM, PenCom collaborate on annuity, group life policy

    The National Insurance Commission (NAICOM) and the National Pension Commission (PenCom) are working with other relevant stakeholders in the industry to implement the provision of the annuity and group life insurance policy in the contributory pension scheme.

    The regulators, last week held a workshop in Lagos, tagged: “Towards effective annuity and group life insurance regulation in Nigeria.”

    PenCom’s Acting Director-General, Mrs Chinelo Anohu-Amazu, said the strategy is meant to carry relevant parties along in resolving pertinent issues and to address any regulatory challenges militating against the successful implementation of the scheme.

    She said the Pension Reform Act allows a retiree to utilise the balance standing to the credit of his Retirement Savings Account (RSA) for either programmed withdrawal through the Pension Fund Administrator (PFA), or annuity for life purchased from a life insurance company.

    “Section 9 sub-section 3 of the PRA 2004 requires employers to maintain a life insurance policy for its employers for at least three times their annual total emoluments.

    “It is the mandate of NAICOM to regulate the annuity and life insurance markets. It is the responsibility of PenCom to ensure that the modalities for the administration of retirement benefits through life annuity as well as terminal benefits involving group life insurance policy are strictly followed to guarantee payments as and when due,” she said.

    The helmsman said since the take-off of the payment of retirement benefits to retirees who opted for annuity, no enlightenment aimed at creating awareness of annuity was carried out.

    Speaking on different procedures guarding the operations of the annuity, which he described as a programmed payment for life, the Assistant Director, Inspectorate, NAICOM, Sam C. Onyeka, said there are many provisions, which operators must obey for the benefits to be realised.

     

     

     

     

  • DANA: Insurance chief hails claims payment to victims’ families

    DANA: Insurance chief hails claims payment to victims’ families

    The Commissioner for Insurance, Mr. Fola Daniel, on Thursday, commended the local insurance industry on the payment of claims to families of victims of the crashed Dana Airline.

    Dainel, who gave the commendation in Ilorin at a seminar for finance and business editors, said that all beneficiaries were being paid their entitlements.

    “On the Dana claims, we are doing well, if anybody has not received claims, it is due to problem of documentation,” he said.

    Daniel said that 70 per cent of the claims were being handled by foreign companies, while 30 per cent were being done by Nigerian companies.

    He alleged that the payment was nearly marred by crisis as some people came up with frivolous affidavits to support claims that were not due to them.

    The commissioner said that insurance was still considered elitist in Nigeria as very few persons in the urban centres subscribed to insurance policies.

    He said the insurance industry in the country had a lot of potential to grow if the business was encouraged at the grass roots.

    Daniel said that in the bid to develop this potential, the National Insurance Commission was in the final stages of developing a framework for micro insurance in the country.

    He said that the exposure draft of the framework had been released for inputs from stakeholders.

    “If we explore the potentials we have, the size of insurance industry can be 10 times the size of the banking industry,” the News Agency of Nigeria quoted the Insurance chief as saying at the forum.

    He said the insurance industry could improve its income tremendously if the potentials in the oil and gas sector were also tapped.

     

  • Violators of ‘no premium, no cover’ policy to pay N500,000 fine

    Violators of ‘no premium, no cover’ policy to pay N500,000 fine

    Firms and brokers that flout ‘no premium no cover’ policy of the National Insurance Commissionin (NAICOM) are liable to N500,000 fine, it has been learnt.

    A document from the Commission states: “As a result of the growing challenges arising from huge levels of outstanding premium reported in the financial statements of insurance companies, and to protect the interest of policy holders and other stakeholders from negative consequences of the gaps in existing practice, insurance brokers and underwriters are required to comply with the requirements.

    “Any insurer who grants cover without having received premium or premium notification from the relevant insurance broker, shall be liable to a fine of N500,000 in respect of each cover so granted.

    “All insurance brokers shall within 48 hours of receiving insurance premium on behalf of any insurer, notify the insurer in writing in each case, of receiving such insurance premium. An insurance broker who fails to notify the insurer of any premium received on his behalf shall be liable to a fine of N250,000 in each case of failure to notify.”

    In the case of a lead insurer and co-insurers, it indicated that a lead insurer, who fails to pay other co-insurers premiums received on their behalf within 30 days, shall be liable to a penalty of 10 times the amount of premium not remitted.

    The document said that insurers shall quarterly, and not later than 30 days after the end of each quarter, notify the commission of premium acknowledged as having been received by the brokers, but not remitted to them.

    It said any insurer that failed to render this return shall be liable to a fine of N5,000 daily for which the non-rendition continued.

    On the insurance brokers, the NAICOM new rule indicated that insurance brokers shall quarterly and not later than 30 days after each quarter, render to the Commission returns of premium received and unremitted to the insurers.

    The Commission said any broker that failed to render this return shall be liable to a fine in the sum of N5,000 for each day for which the non-rendition continues.

    Penalties imposed on an insurance operator before the new circular shall be disclosed in its annual financial statements and report to shareholders, the Commission stated.

    However, the Managing Director, Royal Exchange Prudential Life, Wale Banmore, praise NAICOM for the policy.

    He told The Nation that about one week into the implementation of the policy, so many clients who otherwise would just have written, expressing their intention to stay on cover, had really backed it up with payments.

    He said: “I don’t want to mention names, but it is vey encouraging, it has not been like that in the past years. There may not be a 100 per cent compliance from day one, but it is an ongoing exercise.”

    Banmore said the position of NAICOM became necessary because of the Commission’s desire to help both the public and the underwriting firm, stating that the law is not new as it has been in existence, even before the insurance Act of 2003. “What the law is simply saying is that there will be no cover unless the premium is fully paid, that is what is done worldwide, he added.

    He explained that there are two ways insurance premiums can be paid, either directly to the insurance firms, or through the intermediaries, such as registered agents or brokers who will make the full payment to the underwriters before a cover can be granted.

    Banmore said it has always been like that, but due to exigencies and other factors, people will insure their properties. However, the premium will not be paid on time, adding that some only come to pay when there is a claim. This is what NAICOM is out to fight because it has put a lot of strains on the underwriters, he said.

    He said NAICOM is out to protect the public by insisting that insurance firms must be ready to pay their claims when it is due, and at the same time protect the firms so that they can ensure their funds come to them as at when due, stating that every cover must be accompanied by premium payment.

    The Royal Exchange Prudential boss said the government is not exempted from the rule. “Although the government contributes about 60 per cent of insurance premium to most insurance companies, the rule does not exempt them,” he said.

    He said the industry is watching to see how the government would respond, but he assured that if there is no payment from the government and a claim occurs, no insurance company in Nigeria would respond.

    He said NAICOM is watching underwriters and has thretened to sanction any firm that may flout the order.

  • NAICOM may review MDRI programme

    The National Insurance Commission (NAICOM) may review the Market Development and Restructuring Initiative (MDRI) designed to enhance the industry’s growth, The Nation has learnt.

    The Commissioner for Insurance Fola Daniel, who disclosed this in a telephone interview, said NAICOM will next year review the guidelines of the initiative to align it for better performance.

    He said the review is one of the commission’s programmes for the new year.

    It was learnt that the review became necessary due to the failure of the industry to achieve projections envisaged for it in the first phase where a target of N 1 trillion premium income was to be attained.

    Managing Director Riskguard-Africa Nigeria Limited Yemi Soladoye said delay in the implementation of the initiatives affected the projections set to be achieved, adding that the programme was meant to start in 2009, but never took-off until 2011.

    He noted that to recover the lost period, there should be a shift in the deliverables to make-up for the difference between the time of the strategy crafting and implementation. He said the N1 trillion premium income projection was to be achieved with a four-year strategic plan, adding that there is no way the target would be achieved, with the commencement of implementation of the initiative a year to the set deadline.

    He said: “Most people are reading the strategy document and not relating it to when implementation took off. If there is a projection that in four years we will get N1 trillion premium and from the implementation document, we were to start in 2009, we had what we are to achieve in 2009, 2010, 2011 and 2012. So, N1 trillion is in four years. If implementation started in 2011, it will be a case of shifting the deliverables forward based on the difference on the ground between the strategy crafting and the implementation”.

    He said the initiative is remarkable in the history of the industry.

    He noted that the initiative cannot be wished away as it has brought about many developments adding that efforts by NAICOM to reposition the industry through micro-insurance, takaful and more are strategic plans stated in the MDRI document.

     

  • Framework to protect insured coming, says commissioner

    Framework to protect insured coming, says commissioner

    The National Insurance Commission (NAICOM) is taking steps to reposition the industry to protect policy holders and serve the low-income earners, the Commissioner of Insurance, Fola Daniel, has said.

    Speaking at a forum in Lagos, Daniel said the commission has reviewed the industry’s claims management process which culminated in the development of a draft framework.

    “The framework when operational will enthrone robust insurance consumer/policy holder’s protection, fair treatment of customers, transparency and disclosures”, he said.

    According to the Commissioner, this will go a long way in improving public confidence in insurance.

    He said the steering committee that would facilitate micro-insurance development in the country will include all the stakeholders such as regulator, the Nigeria Insurers Association (NIA), NCRIB, Corporative societies, micro finance institutions as well as non-government organisations.

    Daniel also added that collaboration will also take place under the auspices of the national financial inclusion strategy that was introduced recently by the Federal Government.

    He said,”the process for the appointment of a national micro –insurance coordinator to drive for financial inclusion using micro-insurance is ongoing. The expert will transfer knowledge and will coordinate all the partnership between all the stakeholders in micro insurance value chain.”

    According to the Commissioner, the development of a reliable micro insurance framework is moving close to completion. He said the framework will provide clear rules for the would-be operator and proactive micro insurance consumer protection requirements.

    In recognition of the peculiar nature of micro insurance, the Commissioner said that the framework would be simply supervisory, reporting, underwriting and licensing processes and identification of certain incentives for micro insurance model selection, fees and commission level for intermediaries.

    He said: “We shall ensure that the rules are flexible and are designed in such a way that encourages new and innovative products that relate to the needs of the small and medium enterprises and at affordable cost.”

    According to NAICOM Boss, an effective micro insurance distribution channel is a major concern. The issue, he added could not be overemphasize considering the fact that micro insurance cannot be effectively accessed using the conventional intermediaries such as the brokers and agents.

    He said there are a variety of alternative intermediaries and channels that that can be involved in micro insurance distribution. The distribution network appears to be highly concentrated in a few cities with a focus on corporate accounts and mandatory insurance using alternative channels and distributors that already have links with the uninsured in rural and urban areas is vital for sustaining development of micro insurance while offering value and convenience to clients,” he added.

  • NAICOM’s proposed ‘no premium, no policy’ excites insurers

    The insurance community is excited over the plan of the National Insurance Commission (NAICOM) to implement the ‘No premium No policy’ from Monday.

    To insurers, the proposal was a right step in the right direction.

    It was taken to reposition the industry and make it contribute to the development of the economy.

    The Managing Director, Royal Exchange Prudential Life, Mr Wale Banmore, said the implementation of the policy will have effects on the insured, the insurer, as well as on the economy.

    On the insured, he said when the insurance firm collects premium on time and invests same, when it is time to pay claims, the insurer will not have any reason to drag its feet. He said, “for instance if someone insures a car for N1 million on the first day of a month and pays just N100, 000 and on the tenth day of that same month the claim becomes due, the insurance company will not have any option but to pay the insured the N1 million irrespective of the fact that the insured paid just N100,000 premium 10 days ago. The insurer must pay the N1million. So the insurance companies need the premium from the insured as early as possible to pool together and invest so as to be able to carry the risks.”

    On insurance firms, he said they are all over the world thrive on putting the little amount of premium paid by the community (the insured) together, and investing same. The policy when fully operational will affect the insurers positively, he said, adding that in the instance of governments that normally pay in areas, he said they will have no option than to adjust.

    He said.“The law is that you must pay before cover is granted. All over the world, insurance covers are only extended after premium has been made. It is only in Africa, we always try a way around an issue that will not take us anywhere. The government is the biggest consumer of insurance products but the insurance industry is determined to implement the policy because this is the right way to do it.”

    Also, the Managing Director of Union Assurance Limited, Mr Godwin Ejembi Odah, said it is not that the government does not pay premium, it is only that it takes time. They don’t pay as at when due but the government does pay.

    “The government takes time in everything. For instance, the budget that is the basis for everything does not usually become operative immediately because of the process that it goes through. The National Assembly has to approve budgets before they can become operational, that is why government takes time before paying premium but it does pay.

    “But we hope that there will be changes because the era of extending insurance cover on credit is over.” He said when insurance companies get their premium on time, invest same and run their businesses profitably, they will be able to pay dividend to their shareholders and the economy will be the better for it.

    Commissioner of Insurance, Fola Daniel, said as from January 1, 2013, all insurance covers shall only be provided on a strict, ‘no premium no cover’ basis to all who seek such cover, be they governments or otherwise. He said the day premium is paid is the day cover is provided, “no cover on credit anymore,” he stated.

    The Commissioner said “any insurer who grants cover without having premium in advance, or premium receipt notification from the relevant insurance broker, shall be liable to a penalty of N500, 000 for each cover so granted, and in addition, may have his licence suspended.

    He said: “Irrespective of the period of insurance, insurers shall ensure that at any point, they have received directly or indirectly, through the insurance broker the full premium in advance for cover being granted.”

    Daniel observed part of the reasons insurance firms are unable to settle claims promptly could be attributed to the delay, or non-payment of premium by the insured.

    According to him, “most insurance firms make huge provisions for outstanding premiums in their books annually, which invariably affects their bottom-line and thus, their ability to settle claims as and at when due to the insured, make profit, pay dividend to shareholders and attract investments to enable growth”.

    He noted that the situation is unhealthy and dangerous to the insurance industry and unless it is halted, it is capable of driving the industry into extinction.

    Daniel accused government at all levels as the major culprit as far as insurance on credit is concerned. We have noticed that budgetary provisions for insurance of government assets and properties are either inadequate or in most cases not made at all.”

    “Besides, where the provisions are made, payments of premium to insurance companies are either delayed for months or the funds redeployed to meet other needs by ministries, departments and agencies of government which is in clear breach of Section 50 (1) of the Insurance Act 2003.” From now January 1,2013, no insurance cover shall be extended government or any other person without adequate premium paid.

    Managing Director, Royal Exchange Life, Wale Banmore, said the policy will succeed and that corporate bodies were making calls to inquire on payments for their policies.

    Banmore said before the policy was announced, most of them will not make any enquiry until about the second quarter of the year.

    He said he was optimistic the policy will succeed.

  • NAICOM issues guidelines on ‘no premium no cover’ policy

    NAICOM issues guidelines on ‘no premium no cover’ policy

    National Insurance Commission (NAICOM) has issued new guidelines to protect policy holders and other stakeholders from the existing practice of ‘no payment no cover’ to policy holders whose premiums are in areas, or unremitted.

    In the guideline issued yesterday, NAICOM has decreed that all insurance operators are required to comply with the new guidelines with effect from the first day of January 2013.

    All insurance brokers and insurers are required to, not later than 31st March 2013, carry out a reconciliation of their accounts and all unremitted premium remitted to insures and reinsurers as the case may be.

    Penalties imposed on an insurance operator with regards to the new guideline shall henceforth be disclosed in its annual financial statements and reported to the shareholders.

    In the guideline, NAICONM said: “All insurance covers shall only be provided on a strict ‘no premium no cover basis,’ consequently only cover for which payment has been received directly by the insurer or indirectly through a duly licensed insurance broker shall be recognisable as income in the books of the insurer.”

    The insurance industry regulator has then warned that “any insurer who grants cover without having received premium in advance or premium receipt notification from the relevant insurance broker shall be liable to a penalty in the sum of N500,000 in respect of each cover so granted, and in addition may be a ground for suspension of the license of the insurer.”

    Irrespective of the period of insurance, the guideline notes that “insurers shall ensure that at any point in time they have received directly or indirectly through the insurance broker the full premium in advance for the cover being granted.”

  • We’re not closing any insurance firms, says NAICOM

    The National Insurance Commission (NAICOM) has no plan to close any insurance firm as reported by Business Monitor International (BMI) Limited in its Nigeria Insurance Report, the Commissioner for Insurance Fola Daniel, has said.

    He told The Nation that NAICOM has no reason to close any underwriting firm, adding that the commission is committed to strengthening the firms for the protection of policyholders.

    In its report BMI said there are some insurance companies that the regulator would shut. It noted that NAICOM is also keen to improve capitalisation and standards among the 15,000 insurance agents and 350 brokers.

    It said: “Over the years that BMI has been monitoring the Nigerian insurance sector, the story has remained the same even as premiums appear to have grown.

    “An industry that is largely ignored by foreign multinationals with South Africa’s Metropolitan being an exception, consists of a large number of extremely small, predominantly listed indigenous insurers.

    “As is explicitly noted in the discussion by NAICOM, the regulator, of the objectives for its Market Development & Restructuring Initiative (MDRI), there are a number of bogus insurance companies that the regulator is keen to close.

    “The BMI report further added that till now, there has been no sign that the MDRI has had a substantial and positive effect on insurance penetration or popularity in a country where 94 per cent of people are completely uninsured.”

    It noted that in relation to the MDRI, it believes that total premiums this year would be about one third of the N1 trillion that was envisaged by NAICOM.

  • Operators urge NAICOM to change tactics

    Operators urge NAICOM to change tactics

    Operators are not excited with the way the National Insurance Commission (NAICOM) is regulating the sector.

    They want the commission to develop what they call practical strategies for taking insurance to greater heights and talk less.

    Though they said operators say the leadership has tried, they believe more could still be done to deepen the penetration of insurance in the country.

    Managing Director, Riskguard-Africa Nigeria Limited, Yemi Soladoye, told The Nation, that it was necessary for the Commission to concentrate on how the industry could move forward.

    He said: “NAICOM having pushed all these reforms and sanctions to the market, in the last three years, should concentrate on how the industry can get quantitative results from all the good things they have done.

    “As they have brought in Market Development and Restructuring Initiative (MDRI), they need insurance education and enlightenment to get the result and should now begin to look at it in quantitative terms. If they would need to help insurers on skill development they should do that. If they would help them even on product development, they should do that. If they need to assist them in providing training, they should do that, for there is huge man power shortage in the agency system. Not many people know how to run agency, so many of them do not have experience, so, if NAICOM is to help them on retail market, it will be okay.

    “If they would help them on payment system, especially mobile payment, they should also do that. So, that at the end of the day, NAICOM would concentrate on things that would bring about huge volume of premium.”

    Meanwhile, the NAICOM has lifted the suspension placed on the Akure-based insurance brokers, Prime Investment Insurance Brokers Limited.

    In a statement NAICOM’s Assistant Director Corporate Affairs, Lucky Fiakpa, said the lifting of the suspension is sequel to the satisfactory conduct of the broker during the period it was sanctioned and that the company has purged itself of the infractions that necessitated its hammer.

    The company was suspended on June 14, 2012 for not handling the Ondo State Government property insurance account properly.

    The Commission, however, advised that the company to “henceforth conduct its business in line with good corporate governance and market practices.”