Amidst daunting challenges, the National Insurance Commission (NAICOM) and operators came into the year with high expectations. Their goals were hinged on Market Development and Restructuring Initiative (MDRI), launch of Nigerian Insurance Industry Database (NIID) and other initiatives. But at the close of the year, most targets were not achieved. CHUKS UDO OKONTA examines the events that impacted the sector.
How to grow the industry was paramount to the National Insurance Commission (NAICOM) and operators, who came into the year with hope of leveraging essentially on the enforcement of Market Development and Restructuring Initiative (MDRI), Nigerian Insurance Industry Database (NIID) to achieve their targets. While the MDRI mandates the public to comply with compulsory insurances such as motor vehicle, buildings and buildings under construction, employer’s liability, medical professional liability, group life for all employers, the NIID was designed to develop a database for insured vehicles in the country. The industry set a target of over N100 billion to be achieve through the NIID.
The operators were also optimistic that the enforcement of their initiatives would aid the attainment of N1trillion gross premium income by the end of the year, a dream which now seen a mirage according to feelers from the industry.
MDRI is a medium term industry development plan by the NAICOM covering the period of 2009-2012. It is designed to operate as the first phase of the necessary reforms in the insurance sector and focused on the following: enforcement of compulsory insurance products, increase insurance awareness, reduction in the incidence of fake insurance, insurance agency reform. It was the industry’s projection that the following results will be achieved by the end of this year: gross premium income of
N1.10 trillion, creation of additional 250,000 new jobs, make substantial contribution into the Fire Service Maintenance Fund (FSMF) as provided in section 65(5) of the Insurance Act and attain3.0 per cent insurance contribution to the nation’s Gross Domestic Product (GDP) as against 0.72 percent in 2008.
Developments that impacted the industry are issuance of guidelines by NAICOM, directives on money laundry, Dana aircraft crash, NIID, appointments, and others.
The Commissioner for Insurance Fola Daniel said NAICOM adopted thematic guidelines to ensure continuity in the industry’s reform, adding that yearly change of guidelines would not help in achieving the desired reform of the industry. He said the adoption of the guidelines would help strengthen most of the policies that are being implemented by operators.
He said every policy stated in the guidelines will be strictly implemented to help promote the on going reform in the industry. He noted that the industry has moved very slowly, as it has been walking in the last years, with an attempted to jog. He said the industry would no longer jog but we run to meet with public expectations.
Daniel said notwithstanding the challenges in the industry, NAICOM has continued to provide leadership and roadmap for the industry in the relevant areas through the issuance of regulatory guidelines, circulars and letters, adding that 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, risk management, claims management, micro insurance, takaful insurance and others. He said guidelines on takaful will be out this month.
TRAINING ON MONEY LAUNDERING
In line with the Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT), insurers were mandated to preserve their customers’ information for not less than 10 years after the end of any transaction. They were also to pay a daily fine of N1 million for infraction on the AML/CFT Act.
Director General Nigerian Insurers Association (NIA) Sunday Thomas said the custody of customers’ information is in line with the industry’s bid to have detail information of customers. He said companies are to display in their offices the notice stating the corporate responsibility for disclosure of information in respect of transactions above specified threshold.
He said insures are also to identify the nature and scope of the business to be transacted, the duty to obtain evidence of identification, keep customers information up to date and review customers’ information at every point of transaction.
He noted that insurers are to report to the NAICOM observations detrimental to the their operations, adding that the they have to also receive and vet suspicious transaction reports from staff; rendering "nil" reports with the Nigeria Financial Intelligence Unit (NFIU), where necessary to ensure compliance, co-coordinating the training of staff in Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT), awareness, detection methods and reporting requirements; and serving both as a liaison officer for the NAICOM and NFIU and a point-of contact for all employees on issues relating to money laundering and terrorist financing.
According to him, operators are also to effectively monitor unusual transactions, take enhanced measures in respect of higher risk customers, keep adequate records of transactions and promptly respond to enquires by the NFIU in respect of any transaction with any individual, entity, or organisation named in the request.
He noted that there should also be protection of the security and confidentiality of such requests, create high level awareness and training among the staff, ensuring that all branches and subsidiaries observe appropriate AML measures.
DANA AIRCRAFT CRASH
The Dana aircraft crash on June 3, in Lagos, thrown the nation into pains, as the 153 passengers on board perished. The mishap which is rattled that insurance industry as underwriters that insured the ill fated aircraft incurred about N16.48 billion claims. According to sources, about 34 deceased families have filed their claims which underwriters are franticly working out their claims.
Former Chairman Nigerian Insurers Association Olusola Ladipo-Ajayi said the victims claims would be paid, irrespective of challenges arising from the premium payment. He noted that ‘No Premium No Cover’ clause would not deter insurers from settling the claims of the civil servants who died in Dana aircraft crash.
Ladipo-Ajayi said though the Federal Government is yet to pay the group life cover for its employees; insurers would settle the claims arising from the mishap and collect the premium later.
He said: "On the issue of Head of Service, I know the laws says No premium No cover, but I am not aware that the law criminalises the issue of granting cover without premium. To the best of my understanding and belief, it is a gentle man agreement, when premiums have not been paid, that cover exists. And it has been a serious problem because the federal government is the major insurance buyer in this country and they observe that provision of the law in the breach of it, because of the administrative network. Insurance companies have been in the habit of collecting their premium in arrears. I am sure no insurance company will raise the clause no premium no cover at this point in time for the civil servants that died in the air crash."
He noted that the insurers and government would find a common place to resolve the issue to ensure that the victims get their benefits.
Nigerian Insurance Industry Database (NIID)
The industry’s database project which was conceived in 2010, to help develop robust information on insured vehicles, was launch on June 26. The launch heralded the deployment of the over 500000 electronic card readers to security agencies to verify genuine vehicle insurance licences.
The project according to NIA would eradicate fake insurances and minimise instances of fraudulent claims provide real time information that would address issues raised by all stakeholders: insuring public, market players, law enforcement agents and regulators. Serve as source of historical data for analysis and benchmarking, thereby providing qualitative analysis of industry performance.
It would also that the initiative will enhance transparency and accountability to its stakeholders thereby restoring confidence in the insuring public, creates the basis for scientific management of operations in the industry and it will enable the tracking of transactions in the industry.
NIA GETS NEW CHAIRMAN
Within the period under review, the mantle of NIA leadership was transferred to the Executive-Vice Chairman Industrial and General Insurance Limited Remi Olowude. He promised to take the industry to a lofty height through adherence to laws and creation of awareness.
Olowude said: "In our determination to achieve our mission and objectives as a group, it has become imperative to take deliberate steps towards closer interaction and strategic partnership with all stakeholders, particularly the major arms of government: the Executive, the Legislature and the Judiciary. "Towards this end, the Governing Council will consider seeking an audience with The Presidency to table issues such as the key roles of insurance to the socio-economic growth and development of the nation; how the insurance industry and the Government can collaborate in areas of poverty alleviation; the need to give the industry the opportunity to contribute to the formulation of certain government policies; insurance industry representation in appropriate government committees; among others.
"Closely related to this is the need to restructure and strengthen the NIA secretariat for effective public sector liaison and monitoring of the political andlegal environment as it affects insurance. As recent events in the Nigerian financial sector have shown, no insurance company was too big to fail or too small not to matter. Insurance companies are institutional investors which invest in equities and securities. When these entities fail, insurance companies are faced with the challenges of honouring their obligations to their customers. But unfortunately, there is nothing in place on the part of the government to bail out the insurers in times of trouble. This is food for thought."
He said NIA intends to initiate interactive sessions with the appropriate committees or organs of the two chambers of the National Assembly to discuss issues such as restrictive laws on insurance practice, multiple taxation, insurance awareness and penetration, development of oil and gas industry, etc.
He noted that the NIA will equally strengthen relationships with the different organs of the Judiciary by organising annual or bi-annual Insurance seminars for judges and the leadership of the Nigerian Bar Association, adding that the seminars will focus on developments in insurance law in Nigeria, and ensure that the judiciary, legal profession, the regulators, and practitioners in the insurance industry as well as the media have a mutual understanding of insurance law and practice. The more people understand the law, the less the courts are inundated with avoidable suits.
"The NIA will pay greater attention to its partnership with the Organized Private Sector. We will increase our participation and representation in the activities and deliberations of the Nigerian Association of Chambers of Commerce, Industry, Manufacturing and Agriculture, the Chambers of Commerce and Industry in Lagos, Kaduna, Abuja and Port Harcourt, and the Nigeria Employers Consultative Association.
"The NIA will also support the activities of the Cargo Defence Fund, an offshoot of the Nigerian Shippers Council (NSC). We shall collaborate with the NSC to introduce Protection and Indemnity insurance clubs, to monitor developments in maritime law on carriage of goods by sea and related international conventions. It is my conviction that this kind of collaboration will help to develop marine insurance generally by ensuring full protection of maritime risks, backed by authentic and strong reinsurance cover to lighten the burden of marine insurance claims.
"Promoting Ethical Standards and Ensuring the Workability of Market Agreements. The Association will initiate a review and improvement of the Professional Ethics and Code of Good Insurance Practice for the Insurance Industry in Nigeria. It will be the responsibility of all practitioners and institutions to promote and uphold the tenets of the ethics and codes. The Governing Council of NIA will, in addition, draw a charter for all Council members on the conduct of business by their individual companies. The proposed charter and adherence to its principles will ensure that Council members lead by example with specific reference to market discipline," he said.
NCRIB secretariat commissioned
The Nigerian Council of Registered Insurance Brokers (NCRIB)commissioned its N400 million secretariat.
Its president Mrs Laide Osijo, said: "
We give thanks to God for sparing our lives and for the successes recorded by the Nigerian Council of Registered Insurance Brokers (NCRIB). We have so many things on which we need to rejoice. Things like celebration of our 50th anniversary and the opening of our secretariat."