•Commission generates N1.97b
Insurance operators in the country paid N81.3 million as fines and penalties during the year ended December 31, 2011to the regulatory authority, the National Insurance Commission (NAICOM)as against N70.3 million paid in 2010.
This was revealed in the NAICOM 2011 yearly report obtained by The Nation.
Total insurance levies paid by operators, including insurers, brokers and loss adjusters in the year under review amounts to N1.57 billion as against N1.4 billion recorded in the preceding year.
With a staff of 143,117, NAICOM generated an income of N1.97 billion as against N1.6 billion the previous year and recorded a surplus of N624 million.
Under its operating income, it got Federal Government’s subvention of N582 million, registration and renewal fees of N104 million and attestation fees of N310 million.
NAICOM, however, spent N1.3 billion out of which it donated N2.33million during the year.
Out of the donations, the commission gave N1 million to Nigeria Youth for Goodluck Jonathan, N1 million to fire disaster prevention & safety, N300,000 to Nungtso Charity Foundation and N30,000 to West African Insurance Institute.
Speaking on the industry in the year under review, Commissioner for Insurance, Mr Fola Daniel said the insurance sub-sector underwent substantial structural and regulatory reforms three years ago.
Daniel hinted that the medium term reform plan of the Market Development and Restructuring Initiative (MDRI), the a new Strategic Plan Document and the introduction of micro insurance and Takaful insurance models were possible inclusion in the commission’s plans.
The two insurance models like the MDRI scheme, are focused on addressing issues of low insurance uptake, financial and social inclusion, lack of insurance awareness, market deepening and insurance penetration in the country.
On the nation’s economic outlook, Daniel said overall economic performance last year was likely to increase, but at a slower pace.
He said: “In 2012 specifically, the growth rate of real GDP is expected to fall, inflationary.
“Pressures are likely to be higher, while value of total trade is forecast to decline. This is attributable to increased insecurity and general financial industry reforms still ongoing. The overall growth for the year is expected to be affected by the economic loss from the nation-wide strike early in the year; the partial removal of fuel subsidy will feed into the overall price level to contribute to the inflationary pressures in the economy.
“However, the mounting interest in Takaful and micro-insurance models schemes coupled with appropriate country-wide diagnostic research study will lead to the implementation of a social benefits programme through insurance with resultant effects of higher insurance awareness, market deepening and increase in insurance penetration. The outcome will therefore be increased investments and improved standard of living with a growing economy.”
Furthermore, the commissioner said NAICOM has taken steps aimed at ensuring stricter compliance with existing laws and created additional operational guidelines to strengthen supervision in the industry.
These he stressed include new regulations on premium receivables, solvency margins, and guidelines for the oil and gas insurance.
“The Commission is moving to (bridge) any existing gaps in the regulation of insurer’s solvency status, in addition to remission of premiums by brokers. More so, the Commission has set out to introduce the new accounting administration for the industry.
“The International Financial Reporting Standard (IFRS) is to replace the old practice of financial reporting in the insurance industry and NAICOM is championing its course through various stakeholders’ engagements, awareness and education,” he added.
Accoring to him, NAICOM is also spearheading the anti-money laundering campaigns within the industry in collaboration with other related agencies to prevent fraudulent practices and detect them if any. Insurers’ are advised to undertake due diligence ontheir clients, he said.
Daniel said the commission was at the fore-front of advocacy for the Local Content Act, adding that the law held significant potential for the growth of the insurance industry.
He noted that the law places responsibility on foreign oil companies to retain a substantial portion of their operations in the local economy adding that aside from addressing capital flight, it provides indigenous insurers with an appreciable level of exposure to complex oil and gas risk underwriting deals that could rub off positively on human capital development and underwriting expertise in the industry.
“Under the regulation, no insurance risk in the Nigerian oil & gas industry should be placed overseas without the written approval of the Commission which will ensure that Nigerian local capacity has been fully exhausted. The law aims to retain up to 70.0 per cent of oil and gas risks in the local insurance markets.
“Following the release of Oil and Gas Guidelines, the Directorate inspected 31 insurance companies on April 6 to 19, 2011 to ascertain compliance with the statedguidelines. The reports of the inspection were reviewed and proper sanctions were meted to defaulting companies,” he said.
