Commissioner for Insurance, Fola Daniel
In a bid to deepen insurance penetration in the country, insurance companies strategised on how to deploy takaful and micro-insurance to their advantage in the last quarter, reports Nnamdi Duru
Having had so much to chew in terms of struggling to avoid sanctions by the regulatory body, operators in Nigeria’s insurance industry were very busy in the third quarter.
They were busy strategising on how to expand their operations with a view to deepening insurance penetration across the country and bettering their lots financially.
To this end, many operators were busy reviewing their strategies from top to bottom with a view to falling in tune with the trend in global insurance practice which is the refocus on retail insurance.
Some events that shaped the industry in the last quarter include operators migrating to risk management framework for insurance, resolution of fears stakeholders on insurance compensation for victims of the ill-fated Dana Aircraft.
Others were College of Insurance Project and the resolve by operators on payment for bidding fees for insurance programmes, among other things.
Risk Management Framework for Insurers
NAICOM said it would focus on the implementation of risk-based supervision, adding that starting from the last quarter, all insurance and reinsurance companies would show evidence of a workable risk management framework in-house.
Unlike other regulatory bodies, National Insurance Commission (NAICOM) usually allowed operators enough time to comply with one regulation before introducing another.
In coming up with the risk management framework directive, the commission took into consideration issues such as the impact of capital on the business of regulated companies as well as spill-over effects from the banking industry and uncertainties in the system.
“You cannot migrate to risk-based supervision unless you have risk management framework. We have just released our risk management framework and I am glad to say a few insurance companies have in place risks management framework,” he said.
When the ill-fated Dana aircraft that crashed in Iju area of Lagos State June this year, stakeholders expressed doubts over the industry’s ability to meet claims that may arise from the accident.
However, within the last quarter, the Nigerian Civil Aviation Authority (NCAA) and other stakeholders in the aviation sector said they were happy that the country’s insurance industry was handling matters arising from the national disaster.
A consortium of seven insurance companies that covered the Dana airlines' risks have demonstrated their readiness to settle all claims arising from the unfortunate incident to the excitement of all stakeholders.
The Commissioner for Insurance, Mr. Fola Daniel, who confirmed this, said, “NCAA and all other stakeholders concerned in the ill-fated Dana aircraft that crashed in Iju area of Lagos State are very happy that the Nigerian insurance industry is ready to pay all claims arising from the crash.”
He also confirmed that 70 per cent risk and premium for the cover was ceded to insurers outside the country on the platform of Lloyds & Lloyds of London while the remaining 30 per cent was insured locally and shared among the seven co-insurers.
The commissioner had earlier explained why the consortium of seven insurance companies led by Prestige Assurance Plc were yet to the balance of 70 per cent of the death claims to any family of victims of the ill-fated Dana Aircraft, saying none of them has met the conditions for payment.
Daniel noted that under the insurance contract, death claims could only be paid on presentation of death certificates for the deceased and letter of administration empowering claimants to administer the estate of the deceased.
According to the commissioner, none of the affected families have been able to present of these documents to the insurance companies and as such, full payment has not been made to any family on account of the victims of the air crash, he said.
The commissioner also explained the delay in the payment of the initial 30 per cent of the claims, which statutorily should be made within 30 days of the crash, saying that the necessary clearances were yet to be secured by the affected families.
College of Insurance
In the first half of this year, the Chartered Insurance Institute of Nigeria (CIIN) started negotiations with the Federal Ministry of Employment, Labour and Productivity, with a view to confirming the entry level for graduates of the College of Insurance and Financial Management (CIFM).
CIFM is the baby of CIIN and was established under the CIIN Act which empowered it to determine the standards required of insurance professionals in the country as well as train and upgrade their skills.
The professional body for insurance practitioners in the country said that the negotiation became necessary because the institution was not going to run under the curricula of the National Board for Technical Education (NBTE) which oversees polytechnic in the country.
Certificate and Advanced Certificate in insurance which are equivalent to Ordinary National Diploma and Higher National Diploma under the NBTE programmes respectively would be awarded to graduates of the college.
Government needs to formally recognise the certificates awarded by the college as equivalent to OND and HND respectively.
As the last quarter, the CIIN said it has spent about N250 million on the college project. The CIIN Director-General, Mr. Adesoji Adepegba said the institute was able to mobilise as much as N250 million which was spent on the college project so far. It is also hoped that even as it hoped that academic work would start in the school premises this month.
The institute, by virtue of its statutory powers vide Decree 22 (now Act) of 1993, is charged with the responsibility of determining the standard of skill and knowledge required by insurance professionals for the effective and efficient discharge of their services as risk managers.
Insurance companies in the country under the auspices of the Nigerian Insurers Association (NIA) said under no condition would they pay more than N15,000 as bidding fee for any government business going forward.
In the last quarter, the association commenced moves to sensitise every relevant organisation in the country, particularly government agencies that have been asking its members companies to pay bidding fees for participating in the bid for the business of underwriting their risks.
The association, said in spite of the agitation, it would redirect its efforts towards building a strong relationship with the three arms of government with a view to earning the confidence of all stakeholders in the insurance market in the next two years.
“We will work and act with one voice in all cases going forward. For example in the case of bidding fees for government businesses, we have passed a resolution that no insurance company should pay more than N15,000 in respect of any bid. The circular to this effect would soon be sent to all our members and we expect all insurance companies to abide by this decision,” it said.
“Some level of success has been achieved as the Bureau of Public Procurement (BPP) has agreed to intervene where the fees demanded were considered excessive,” Thomas stated.
Meanwhile the Chairman of the association, Mr. Remi Olowude, said NIA would strive to win the support and respect of all stakeholders in the Nigerian economy, particularly the Executive, Legislative and Judiciary arms of government and the Nigerian Bar Association (NBA) in the next two years.
NAICOM continues with its resolve to ensure that formations under its supervision are not used by criminals to launder dirty money and finance terrorism locally or internationally. It issued guidelines on what the operators are expected to do and how they are to proof to the regulator and other stakeholders that they are not in any way involved in any of these crimes.
The commission also went ahead to ensure that the top echelon of the industry really understands what are expected of them in this crusade even as it warned that it would ensure that all operators under its supervision observe full compliance with relevant the anti-money laundry laws the country.
The Deputy Commissioner in charge of Finance and Administration, Mr. George Onekhena, made the position of the commission known recently, saying: “In compliance with the anti-money laundering act, we are making efforts to ensure that the operators understand what the requirements are and what steps they need to take.”
In the last quarter also, the regulatory body suspended Alliance and General Insurance Company Limited, A & G Life Assurance Plc and Fidelity Bond Insurance Brokers Limited from taking on more businesses until some identified infractions were rectified.
Also, NAICOM in the last quarter advised the Board of Directors of another company to relieve the Chairman, Chief Executive and Finance Director of their jobs having spotted some corporate governance infractions reflected in manipulations in the company’s books.
Furthermore, the self-regulatory body, NIA continued the sensitisation of all stakeholders on the usefulness of the Nigerian Insurance Industry Database (NIID) that was launched towards the end of the first half of the year.
The database is expected to help to eradicate fake insurance and serve as a vehicle for easy identification of genuine insurance documents by relevant authorised persons, monitor insurance transactions documents and reduce incidences of fraudulent insurance transactions.
The association also procured over 300,000, out of the earlier promised 500,000 hand-held devices to be distributed to security agents across the country for easy differentiation between genuine and fake motor insurance certificate holders.
Also, policyholders were asked to check the status of their motor insurance policies via SMS by sending their policy number through text message to 33125 or on the internet.