Commissioner for Insurance, Mr. Fola Daniel
By Nnamdi Duru
The regulator for insurance business in Nigeria, National Insurance Commission (NAICOM) said it had to move away from the regime of operational guidelines to thematic guidelines, saying it was to help it resolve some of the regulatory challenges facing it.
The Commissioner for Insurance, Mr. Fola Daniel, confirmed this while addressing members of the Lagos Business School (LBS) and Pan African University Breakfast Club in Lagos recently.
Reflecting on the topic, ‘Insurance Industry in Nigeria: Opportunities and Challenges’, the commissioner stated optimism that the industry would soon assume a leadership position in the continent and contribute meaningfully to the nation’s Gross Domestic Product (GDP).
He observed that the commission experienced serious regulatory challenges arising from the multiplicity of laws relating to insurance and the regime of compliance-based regulatory framework.
“The current legislations are not only weak but sometimes difficult to enforce. The present regulatory framework is ‘compliance-based’ rather than ‘frame-work’ as is the case with most advanced jurisdictions. This arrangement hardly gives the commission the capacity to take regulatory initiatives in urgent and critical situations,” the commissioner lamented.
To resolve these challenges, the chief regulator said the commission embraced framework-based regulation, adding that at the last count, six guidelines have been issued by the commission in this regard.
“The commission has continued to provide leadership and roadmap for the industry in the relevant areas through the issuance of regulatory guidelines, circulars and letters. Notably, as part of its efforts at achieving a measure of efficiency, the commission has since 2011 ceased issuance of operational guidelines.
“Instead, thematic guidelines now exist under the following heads oil and gas, AML/CFT, Risk management, claims management, micro-insurance and takaful insurance”, Daniel said.
He therefore, made a strong case for the consolidation of insurance laws in the country, saying, “A major condition for the development of insurance business is a healthy legal regime. It is therefore, desirable that the various pieces of legislations constituting the existing legal framework should be consolidated.”
The commission also confirmed that the Insurance Law Review Committee has completed its assignment since 2010, adding that the revised draft Consolidated Insurance Bill is ready for passage to the Legislature by the Executive.
“Depending on the agenda of the National Assembly the country may expect a new insurance regulatory regime before the end of 2013,” he added.
Speaking on the future of the insurance industry in Nigeria, Daniel said: “The insurance sector in Nigeria has just emerged from the dormant stage, where, despite a huge population advantage; it failed to achieve an appreciable growth in 35 years. Suffice to say however, that in 2008 the sector entered into its early growth years and has been making steady progress.
“It is my belief that if the industry is able to maximise and take advantage of all the prevailing opportunities opened to it, the sector will assume a leadership position in Africa’s insurance market and make significant contribution to the Nigeria economy in the nearest future,” he added.
Daniel also pointed the way forward for insurance supervision, saying the commission would continue to enforce corporate governance in organisations under its supervision.
“The Commission in 2009 introduced a Code of Good Corporate Governance for the Insurance Industry. It is aware that corporate governance issues are at the core of regulation and supervision; hence it will continue to ensure that good corporate governance is restored to the companies,” he said
He also identified some of the major challenges facing the country’s insurance industry including limited industry capacity, low insurance awareness and lack of public confidence.
The commissioner also posited that opportunities for growth abound in the industry, particularly in the areas of individual life insurance and micro-insurance, compulsory insurances, oil and gas business as well as the emergence of other financial inclusive products.