Sunday, 30 June 2013

Underwriters kick against domicile of annuity fund with pension custodians


Chuks Udo Okonta

Nigerian Insurers Association (NIA) the umbrella body of underwriters has opposed the initiative in the proposed pension bill to domicile annuity funds with Pension Fund Custodians (PFCs), Inspen has learnt.

The Director-General NIA, Sunday Thomas in an interview, said the association has expressed its misgivings on the issue at a public hearing for review of the Pension Reform Act 2004, in Abuja, last week. He noted that the association is opposing the initiative because the management of annuity is totally different from programme withdrawal, hence, the fund should not be left in the hands of PFCs.

He said: “The Pension report is dealing with different aspects, one of them is the fact that Life annuity funds should be domiciled with pension custodians. We have said that is not in practice in any known jurisdiction, and we do not think it should be so, because the management of pension annuity is entirely different from programme withdrawal. The bases of the liability from both pension arrangements are totally different.”  

The proposed bill, seeks to negate the operational guideline entitled: Regulation on Annuity under Section 4.1 (B) of the Pension Reform Act 2004, issued by the National Insurance Commission (NAICOM) and National Pension Commission (PenCom), which provides that where a retiree chooses the retirement life annuity, the retiree shall based on the Retirement Saving Account (RSA) balance projected to the date of retirement, obtain quotes from life annuity from list of approved eligible insurance companies, as will be provided every quarter by the NAICOM.

The guideline, also states that the PFA managing the account of the would-be annuitant shall, within seven days from the receipt of application from the retiree, seek approval from PenCom to transfer the agreed premium to the insurer and the requests should be accompanied with a copy of a provisional agreement. And the PFA shall instruct the PFC to issue cheque for the premium in favour of the insurance company within seven working days of receipt of approval.

It noted that upon receipt of the cheque from the PFC, the life insurance company shall within seven days notify the proposed annuitant of such receipt, adding that the annuitant and his chosen life company shall jointly execute an annuity contract within 21 days from the date of receipt of payment. Thereafter, the life insurance company shall cause a schedule of all policies written to be forwarded to NAICOM not later than 30 days of its execution.  And that NAICOM shall forward a copy of the schedule to PenCom on a quarterly basis.

The Life Insurance Company is also mandated to issue a standing payment order to its banker to credit the designated bank account of the retiree for the amount of monthly/quarterly payments.


Friday, 28 June 2013

Elected Council Members of the Nigerian Insurers Association (NIA)

Managing Director WAPIC Insurance, Segun Balogun; Managing Director Sterling Assurance, Fatai Lawal; Managing Director Consolidated Hallmark Insurance, Eddie Efekoha; Managing Director Crystal Life Assurance, Teju Ogunjime; Managing Director Masard Insurance, Yetunde Ilori; Managing Director, Staco Insurance, Sakiru Oyefeso; Managing Director, Standard Alliance Life, Austin Enajemo-Isire and Managing Director Sovereign Trust Insurance Wale Onaolapo taking a bow after they were elected as council members of the Nigerian Insurers Association (NIA) at the association’s Annual General Meeting (AGM) yesterday, in Lagos.

Thursday, 27 June 2013

NIA revives oil, energy insurance pool


Chuks Udo Okonta

The Nigerian Insurers Association (NIA) has said it is working on reviving the Nigeria Oil and Energy Insurance Pool (NOEIP) to enable underwriters maximise the nation’s comparative advantage in the oil and gas production.    

Its Chairman, Remi Olowude, who was represented by his Deputy, Godwin Wiggle, disclosed this at the association’s 42nd Annual General Meeting (AGM), today Thursday in Lagos. He noted that the initiative will assist the industry improve on its oil and gas underwriting.

He called on operators to take advantage of the opportunity offered by the initiative to build capacity in the area of oil and energy underwriting.

Olowude noted that the volume of business written by the industry last year was estimated at about N240 billion, as against N217.7 billion made in 2011, adding that in spite the stride, the sector continues to grapple with problems of inadequate national infrastructural facilities and the vicissitudes of the weather which exposed many of the insured assets to flood and other national hazards.

He said last year was particularly challenging for the industry, stressing that however, the industry will continue to play its role of financial intermediation in the economy.

The Director General, Sunday Thomas, on the NOEIP, said following the report of the committee set up by the Commissioner for Insurance Fola Daniel, for the industry to look into how it can explore the provisions of the Nigerian Content Act 2010 to increase the local retention capacity in oil and gas business in Nigeria, the association’s Governing Council, through its committee, reviewed the report and recommended the resuscitation of the existing insurance pool.

He said the committee has continued to make progress in fine-turning other details required for the effective take off of the pool to enable it achieve its goals in increasing local capacity.

He noted that members have been called upon to subscribe and participate in the pool.               

Tuesday, 25 June 2013

IGI Ghana faces liquidation


 Chuks Udo Okonta and agency report

 The National Insurance Commission (NIC) Ghana, has secured a court order to take over the Industrial and General Insurance (IGI) subsidiary in the country, Inspen has gathered.

A report by B&FT, said the move has paved the way for the eventual liquidation and closure of the company’s operations in the country.

Information available indicates that the move by the industry regulator to close down IGI’s operations follows cash flow insolvency issues and operational difficulties faced by the company, which has made it difficult to settle and pay claims as they fall due.

A source from the company said, IGI has long indicated its resolve to divest from Ghana and allows NIC Ghana to take over the company.

He said the decision to divest is as a result of irreconcilable differences between the company and the majority shareholders and its local Ghanaian directors.

 “But the point must be made that the company is not on liquidation at this moment.  The court has only approved administrators for the companies for a period of six months, as agreed with NIC in Ghana, whilst the shareholders are resolving their issues,” he said.    

B&FT learnt the company’s financial situation has put the firm’s policyholders in a fix.

It was gathered that the commercial court on the recommendation of the NIC has appointed President of the Ghana Insurance Brokers Association, Mr. Asante Marfo-Ahenkorah, and the Managing Director of Claim Limited, Daniel Afriyie, as administrators of the life and general insurance business of the troubled company in line with procedures to liquidate the assets of IGI after December this year.

The administrators have been a given six-month duration to complete their work, and the cost that will be incurred through the administrators’ activities will be borne by the NIC and later reimbursed by IGI as instructed by the court.

B&FT enquiries have revealed that all the general insurance policies held by the company’s clients have expired, except life insurance policyholders who will be affected by the liquidation process. However, plans are being fashioned by the NIC, to transfer them to other insurance firms that are robust enough and interested to accept the life insurance business of IGI to enable clients to continue being served.

IGI, a Nigerian-controlled insurance firm with particular focus on special risks such as oil and energy, engineering, aviation, and industrial risk management entered the Ghanaian market in 2008 when it acquired the operations of Network Assurance as part of its Pan-African expansion drive.

The company on entering the market bought several shares of the publicly-traded SIC Insurance Company.

However, IGI’s underwriting profit has been awful and recorded several losses -- drawing concern about the company’s entry strategy and focus. Adding to the company’s woes has been infighting among the directors, which stalled recapitalisation plans.

The NIC, whose mandate under the Insurance Act 2006 (Act 724) is to ensure effective administration, supervision, regulation, monitoring and control of the business of insurance to protect the insurance industry and policyholders, said its enforcement action against IGI has been necessitated by the company’s violations of various provisions in the Insurance Act.

The Administrators appointed by the insurance regulator are required to proffer recommendation to the NIC and lead court action against IGI Ghana Limited in a bid to protect the interests of policyholders, customers and the public; and preserve and prevent IGI from transferring, disposing of or dealing with any of its properties.

In this regard, the administrators are expected to propose the official liquidation of IGI as well as any other action that they may consider appropriate.

However, the administrators are not allowed to issue or enter into any insurance contracts except with the leave of the court and the NIC.


Monday, 24 June 2013

NAICOM gets 10 IFRS accounts, approves three

Chuks Udo Okonta

The National Insurance Commission (NAICOM) said as at today Monday June 24, only three out of the ten 2012 International Financial Reporting Standard (IFRS) compliant accounts submitted by  underwriting firms have been approved.

A statement by the Assistant Director NAICOM, Salami ‘Rasaaq, said the approved accounts are those of Masard Insurance Plc, ADIC Insurance and WAPIC Insurance Plc.

 He noted that the account of First Bank Life Assurance was queried and the commission is awaiting the firm’s response, also queried and awaiting response are those of AIICO Insurance and Oasis Insurance.

He said the response on the query meted to Consolidated Hallmark Insurance is under review, while review is in process on the accounts of Continental Reinsurance Company Plc, Law Union and Rock insurance and NEM Insurance Plc.

  NAICOM said following the announcement of the adoption of the Nigeria road map to IFRS by the federal government; it expects insurance and reinsurance companies to take appropriate steps to ensure a seamless transition to the new financial reporting regime. It noted that to this end, all insurance and reinsurance companies are to submit their plan, for conversion to IFRS, by April 1, 2011. Thereafter, information on the progress made in the implementation of the said plan should be provided in the quarterly return to it.

It said: “This should include, but not limited to, information on the following issues, accompanied with timelines, where necessary: IFRS awareness and knowledge acquisition, conversion management and outline of conversion plan, detailed Gap and IFRS impact analysis, draft IFRS-compliant financial reports, communication channel with relevant stakeholders

“The financial statement for the years ending 31 December, 2010 should disclose this plan and possible impact of IFRS on the opening balances for the year 2011. In particular, the opening balance sheet for the year 2011 and their reconciliation to the closing for the year 2011 should be submitted to the commission not later than 1st September, 2011.

“The IFRS opening and closing balance sheets, which should form the comparatives for 2012 financial reporting, shall be audited.”



FG intensifies search for PenCom’s executives


Chuks Udo Okonta

The screening process embarked by the Federal Government to fill in the leadership gap in the National Pension Commission (PenCom) has reached an advance stage, Inspen has learnt.

Investigations revealed that barely unforeseen circumstances, a substantive Director General and Commissioners to steer the affairs of the commission would be appointed soon.

 A source who is privy to the screening said tremendous process has been made on the screening process to fill the directors and commissioners, adding that the commission is presently standing on a good footing as the former Director General laid a strong institution to keep the commission afloat.

It would be recalled that following the expiration of the tenure of the Chairman and Executive Committee members of the Board of PenCom, which came up on December 16, 2012, the Secretary to the Government of the Federation (SGF) directed that the affairs of the commission be handed over to the Acting Director General Mrs Chinelo Anohu-Amazu, who is the most Senior General Manager.

 Anohu-Amazu was part of the team of experts that midwife the Contributory Pension Scheme (CPS), she served in the Fola Adeola Pension Reform Committee set up by the former President Olusegun Obasanjo, whose work led to the enactment of the Pension Reform Act 2004, and received a presidential commandment for quality of work done on the 2004 pension reform.   

Pension transfer window‘ll not take off this year - investigation



Chuks Udo Okonta

Pension contributors who are anxiously waiting for the transfer window to port from their fund managers to other service providers would have to wait till next year to make their expectations come through, as operators have said they are not ready to commence the process.

Inspen gathered from a reliable source that the National Pension Commission (PenCom) and operators are still battling with some challenges especially biometric issues which are considered a clog to the transfer process.

The Managing Director of a pension firm said in an interview that operators are all concerned about having the window opened and that due to some challenges, operators and PenCom would not commence the process in the immediate.

She noted that part of the process of the transfer window is ensuring that operators’ records are complete and accurate, adding that as part of the process, the identification method must be had, and to achieve a seamless transfer, the biometrics must be carefully done.

She said: “We are all concerned, it is important we get it in place. So, I believe that towards the end of the year, we would have made significant process, and we would begin to talk of specific time lag by then. As at now, we can give you assurance that it is upmost in our minds and it is receiving a lot of attention from the regulator and operators.

“We have engaged consultants, done costing and have made significant process. PenCom also has its side of the transfer window and they are working seriously too. The true is that they are not ready and we are also not ready yet.

“If I want to transfer my account from Pension Fund Administrator A to B, the PFA had to identify me to ensure that it is my account that is being moved from A to B. The only way to have a seamless transfer is to have biometrics. That is the crust of the transfer window; otherwise, you would find that in moving a subscriber’s account from a point to another, you may move the data of another person.  

“Biometrics is the crux and it is what we are waiting to put in place. There is a PenCom leg and operators leg in the biometrics process. If you look at it on our attempt in Nigeria to have an identity, you would see that it is complicated process.”

She noted that  data process has remain a challenge in Nigeria, adding that as the nation lacks identity process, having a good biometrics process would take some time.

She said the operators having considered the extent of work and cost required to build a reliable database, decided, to put effort together, stressing that while the operators are working on the process, they are also pursuing collaboration with other industries that are considering a biometric system.

Sunday, 23 June 2013

Insurers to lose over N10bn on FG’s group life business


Chuks Udo Okonta

The insurance industry will lose over N10 billion on the Federal Government’s group life, for this year which would likely be paid soon, Inspen, has learnt.

 Investigations revealed that the government’s insurance business stands over N21 billion, but it was underrated by underwriters to N11billion.

A broker, who spoke on the issue, said the premium was undervalued by inexperienced underwriters, who quoted what the Head of Service (HOS) adopted as benchmark for this year’s premium.

An underwriter who also expressed misgivings on the undervaluation of government insurance business, said his company was ruled out of last year’s group life business, because he spoke on the lost to the industry due to improper rating of government’s business.

 A report by Punch said the Head of Civil Service of the Federation, Goni Aji, said the government was ready to pay the outstanding N7billion premium for 2011 and 2012.

He said the government prioritised the welfare of its employees and that the insurance cover would serve as an encouragement for families of deceased workers, adding that the government had to manage available resources in the light of competing demands.

Aji said what caused the six-month delay in the payment of workers’ insurance policy premium for the current financial year was because his office could not secure on time the certification from the Due Process Office, which was required for the payment.

The HOS also explained that the process of payment of the group life insurance for the federal workers had changed as it was now being handled by the office of the Accountant-General of the Federation.

He explained that the Federal Executive Council had approved that the payment of insurance premium should be carried out by the office of the AGF.

Aji said the OHCSF office had forwarded a letter to that effect to President Goodluck Jonathan for approval and was asked to revert back to the earlier approval of FEC for the office of the AGF to pay.


He said: “There will be cover for the workers this year. What we have in the appropriation bill for 2013 insurance cover is N11billion. The total outstanding premium for 2011 and 2012 is about N7billion; that is, N4billion for 2012 and N3bn for N2011.

 “The way it is done now is that the Ministry of Finance gives the instruction to Director-General of the Budget Office and the DG officially sends it to the Accountant-General’s office; the Accountant-General releases the funds to the HOS and the HOS now pays into the respective insurers’ bank accounts and all that.

“So, it is just a question of electronically instructing the office of the Accountant-General to pay so that it can now reduce the time deployed to process it.”

Aji added that whether the full premium for this year would be paid or not depended on the level of revenue generation and inflow to the Federal Government.

In 2008, the Federal Government started the group life insurance scheme for its entire workforce with the first premium of N4billion.

The regulation backing the scheme is contained in Section 9(3) of the Pension Reform Act, 2004, which states that the employer shall maintain life insurance policy in favour of the employee for a minimum of three times the annual total emolument of the employee.


Friday, 21 June 2013

Telematics: How big data is transforming motor insurance industry

True innovation is a rare thing, particularly in the insurance sector. But telematics could turn out to be a technology that will revolutionise the entire motor insurance industry.

Telematics refers to the use of wireless devices to transmit data in real time back to an organisation. The data recorded in telematics devices can be used to develop more accurate pricing, improve the granularity of risk management techniques and reduce losses by enabling better claims assessments.

In the motor insurance industry, the terms telematics and usage-based insurance (UBI) are often used interchangeably - but they are actually two different concepts. Usage based insurance is a broader concept that can be broken down into two categories: self-reporting policies and telematics-based policies.

Much has been written about the pros and cons of using telematics - and many have made a business case for implementing usage-based insurance in the motor industry.

This white paper focuses on the challenges insurers will face due to the explosion of data. It will also explain how analytics can help carriers analyse all of the information that will soon be available to them.

 Source: SAS




Marsh completes acquisition of Alexander Forbes’ interest in Femi Johnson & Company

 Marsh, the global leader in insurance broking and risk management, has acquired Alexander Forbes’ interest in Nigerian insurance broker Femi Johnson & Company Ltd (FJC).

Marsh completed the previously-announced acquisition on Thursday.

As a shareholder in its long-standing Nigerian partner, Insurance Brokers of Nigeria Limited (IBN), Marsh also announced its intention to combine the business of its newly-acquired operations in Nigeria with IBN.

Subject to regulatory approvals, the combined operations of IBN and FJC will become the leading insurance broker and risk adviser in Nigeria.

This transaction follows last year's acquisitions of Alexander Forbes’

South African insurance broking operations, Alexander Forbes Risk Services and related ancillary operations, as well as Alexander Forbes’ insurance broking operations in Botswana, Malawi, Namibia, Uganda, and Zambia.

Jurie Erwee, Chief Executive Officer of Marsh Africa, commenting on the latest deal, said Nigeria was a strategic market.

“We are delighted that our African expansion plans are advancing so well. Nigeria is a very important part of our African strategy.

Extensive natural resources, a dynamic consumer market and strong economic development all make Nigeria an ideal market for us to offer the full spectrum of insurance broking and risk advisory services" said Erwee.

Erwee said the company was looking forward to contributing to the country’s continuing growth through the provision of its specialist expertise.

David Johnson, Chief Executive Officer of FJC,  said Marsh’s deep industry expertise and insurance market knowledge will be a valuable asset for local enterprises wanting to grow and expand.

“Companies in Nigeria are looking for business opportunities both within the country and beyond.

"By making Marsh’s extensive global experience and resources available to firms locally we will enable Nigerian firms to meet the challenges of an increasingly complex risk landscape," he added.

Marsh is a wholly owned subsidiary of New York Stock Exchange-listed Marsh & McLennan Companies. It has more than 53 000 employees worldwide and annual revenue exceeding $11 billion.

Source CAJ News

Thursday, 20 June 2013

Terrorism: NAICOM orders insurers to stop transactions with Amigo Supermarket, 20 others

Chuks Udo Okonta

The National Insurance Commission (NAICOM) has urged insurance operators to stop business transactions with Amigo Supermarket, Wonderland Amusement Parks and 19 other firms/individuals that are being investigated over terrorist financing by the Department of State Services (DSS) and the Nigerian Financial Intelligence Unit (NFIU).

Deputy Commissioner for Insurance Technical, Ibrahim Hassan, in a circular entitled: Investigation of Money Laundering/Terrorism Financing, issued to all insurance operators, said in addition to suspending all business transaction with the firms and individuals, insurance companies are required to file Suspicious Transactions Reports (STR) immediately on all financial transactions conducted with them and their associates including relevant documents such as completed proposal form, policy documents, third party beneficiary both local and foreign, beneficiary owner and instrument used for premium settlement to the NFIU.

He noted that companies are also required to search their database and avail NFIU with any information with regards to them and their associates.

The affected firms and individuals are Taher Ramzi Fadlallah, Fadlallah .I, Fadlallah Hassan Ali, Fadlallah Hassan Ali, Fadlallah Rim Lakisse, Mustapha Fawaz, Tahir.T. Fadlallah aka Mohammed Tahir Fadlallah, Talal Roda, Abdullahi Tigani, Fauzi Fawaz, Gazi Fawaz, Zubair Khan, Paul Odey, Yinus Ayuba, Godwin Amodu, Ibrahim Musty, Olwanishola Adebayo, Tahir Guest House, Amigo Supermarket, Wonderland Amusement Park and Mustapha Fawaz Automobile Works Limited.




IFRS: NAICOM identifies errors observed in operators’ accounts


Chuks Udo Okonta


The National Insurance Commission (NAICOM) has outlined the mistakes in the 2012 International Financial Reporting (IFRS) compliant financial accounts submitted by some insurance operators.


In a circular tagged: Common issues observed in the pre-submission review of 2012 IFRS financial statements, sent to all insurance companies, NAICOM said as part of the steps embarked on to facilitate the seamless finalisation of IFRS-based financial statements and statutory returns for the year ending 31 December, 2012, all insurance and reinsurance companies whose financial statements had been audited were invited to take advantage of its IFRS help desk facility for a risk-free review of their IFRS conversion outcomes.


The commission noted that in the last few weeks, it has considered the work of a good number of companies that have responded to this call, adding that the circular was issued to draw the attention of companies that are yet to submit their returns, to the major mistakes and areas for improvement which had been revealed so as to be guided accordingly.

The circular reads:  Company information; a. Principles: i. Information should be presented in a logical manner.

ii. IAS 1.138 (b) requires, if not disclosed elsewhere in information published with the financial statements, a description of the nature of the entity’s operations and its principal activities.


b. Gaps: i. Placement of “Company Information”: The decision to present the accounting policies before the primary financial statements resulted in the retention of “company information” as part of the other notes, presented after the primary financial statements. However, as “Company Information” contains contextual details( such as operations and principal activities) that are critical to the appreciation of accounting policies, the section of “company information” ought to be placed in the same section as accounting policies, before the primary financial statements.

ii. Description of the entity's operations and principal activities: The description of the nature of the entity’s operations and its principal activities is incomplete. While the description of operations is scanty, most financial statements reviewed did not describe the company’s principal activities.


c. Improvements Recommended i. Company information and accounting policies should be place before accounting policies and titled “Company information and accounting policies”.

ii. information on “operations and activities” for insurance business should incorporate the following 1. Business acquisition

2. Underwriting

3. Claims

4. Investments



d. Information on other businesses should be guided by 1(c)(ii)



a. Principles: Reporting entities are required to “present information about the basis of preparation of the financial statements and the specific accounting policies used” In this regard being the year of first adoption, Companies are expected to provide information on the basis of the conversion of financial statements prepared under Nigerian Gap to IFRS. This is governed by IFRS 1 First time adoption.


b. Gaps Observed: We noted the following gaps in this area: i. Transition Adjustments: Some companies did not indicate which of the following adjustments required by IFRS 1 (where applicable) made. 1. Nigerian GAAP assets and liabilities derecognized :

2. Assets and liabilities not recognized under Nigerian GAAP now recognized.

3. Items in Nigerian GAAP Balance sheet reclassified into appropriate IFRS categories.


ii. Mandatory exceptions/ Optional Exemptions: The mandatory exceptions applied and optional exemptions adopted with respect to the requirement on retrospective application of IFRS were not identified and or explained. When identified or specified, they were included in the other notes instead of accounting policies where they belong.

iii. Mentioning of disclosure requirements of IFRS 1: The following disclosure requirements of IFRS 1 as may be relevant to the company and provided in the notes to the financial statements were not mentioned. 1. Reconciliations of equity reported under Nigerian GAAP to equity under IFRS, both as at a. 1 January 2011 ( for consolidated Accounts, group and parent )

b. 31 December, 2011( for Consolidated Accounts, group and parent )


2. Reconciliations of total comprehensive income for the year 2011 under the Nigerian GAAP to total comprehensive income under IFRSs for the same period.

3. Explanation of material adjustments that were made, in adopting IFRSs for the first time, to the balance sheet, income statement and cash flow statement (IFRS 1.25).

4. Errors in Nigerian GAAP financial statements discovered in the course of transition to IFRSs (IFRS 1.26).

5. Any impairment losses recognized or reversed in preparing the opening IFRS balance sheet [IFRS 1.24(c)].


iv. In the case of items b (iii) (1) - b (iii) (3), sufficient information was not provided. Some presentation formats were deficient and or the explanations of adjustments were not satisfactory.



c. Improvements Expected i. All information required by IFRS 1 that are relevant to each company should be provided as part of the basis of preparation of the IFRS financial statements in the section for accounting policies. Only schedules containing details of their impact and actual disclosures should be included in the Notes to Accounts section. Where they are not relevant, this should be stated. This will assist the user in appreciating changes that have been made as a result of transition to IFRS.

ii. Presentation Formats: In order to assist in addressing the issues concerning presentation in b(iv) above, an illustrative format ( for statements and related notes) for IFRS transition reconciliation and adjustments is attached for guidance





a. Principles: IAS 8.30 requires reporting entities to disclose information that will enable users understand the effect of those IFRSs and or amendment issued but not yet effective and not adopted.


b. Gaps: Most companies presented information about specific item but failed to meet the requirement of IAS8.30 and IAS8.31. The statement by some Insurance companies that they were in the process of determining the impact of any or all of these standards are inadequate. Some of such statements are made erroneously in regard to standards which are not relevant to the reporting period as their effective dates were from January 1, 2013.


c. Improvements Expected: Complete compliance with the requirements of IAS 8.30 – 8.31. The following should be disclosed i. The title of the new IFRS

ii. The nature of the impending change or changes in accounting policy

iii. The date as at which it plans to apply the IFRS initially; and

iv. Either 1. A discussion of the impact that initial application of the IFRS is expected to have on the entity’s financial statements; or

2. If that impact is not known or reasonably estimable, a statement to that effect.






a. Principles: IAS 1.113 prescribes that reporting entities “as far as practicable, present notes (including accounting policies) in a systematic manner”. For accounting policies, apart from items affecting the financial statements as a whole (e.g. consolidations and insurance contracts), a systematic presentation would be the order in which they appear in the financial statements.

b. Gaps: i. Accounting policies were not presented in logical sequence in line with the contents of Financial Statements. Items common to all financial statements and those peculiar to statement of financial position and statement of comprehensive income are mixed up.



c. Improvements Expected: The accounting policies should be in sequence of relevant line items as contained in the primary financial statements. Except where the nature of the item concerned makes it impossible, accounting policies should be presented in the following broad sequence with items for each financial statement being presented in the sequence of their presentation:


i. General policies.

ii. Policies on items in statement of financial position.

iii. Policies on item in the statement of comprehensive Income.

iv. Polices on items in the statement of cash flows.

v. Policies on items statement of changes in equity.



a. Principles: i. Accounting policies should provide information that will assist users in understanding how transactions, other events and conditions are reflected in reported financial performance and financial position.

ii. Disclosure of particular accounting policies is especially useful to users when those policies are selected from alternatives allowed in IFRSs.


b. Gaps: i. The accounting policies for some material items or transactions reported both in the financial statements are not disclosed. In particular, the requirement for the hypothecation of Assets is not mentioned as a requirement of the law.

ii. Accounting choices made from options permitted by IFRS were not disclosed.


c. Improvements Expected: i. All line items in the primary financial statements are expected to have underlying accounting policies.

ii. The requirement for the hypothecation of Assets as well as their implications and their manner of disclosure in the notes should be mentioned under the accounting policies.

iii. Where a compound name is used for various category of items of assets or liabilities, such as Property, Plant & Equipment (instead of land, building, Equipments, etc), Insurance Contracts Liability (instead of Unearned Premium Reserve, Outstanding claims Reserve, Unexpired Risks, etc); the accounting policies for each of the categories should be disclosed.

iv. All accounting choices made from options permitted by IFRS should be mentioned in accounting policies.





a. Principles: Provide relevant information that will assist users understand critical accounting assumptions, sources of estimation uncertainty and judgments that management made in measuring carrying amounts and applying accounting policy that may have the most significant effect on assessment of the financial performance or position

b. Gaps: Inadequate disclosure of critical accounting assumption, sources of estimation uncertainty and judgment’s that management has made in the process of applying the entity’s accounting policies that have the most significant effect on the amounts recognized in the financial statements

c. Improvements Expected: i. Disclose under accounting policies, those Judgments that management has made in the process of applying the entity’s accounting policies and that have the most significant effect on the amounts recognized in the financial statements;

ii. Disclose under accounting policies the nature of assumptions and other sources of estimation uncertainty that relate to the estimations that require management’s most difficult, subjective or complex judgments; that have a significant risk of resulting in a material adjustments to the carrying amounts of assets and liabilities within the next financial year.

iii. The disclosures should be presented in a manner that would help users of financial statements to understand the judgments that management made about the future and about other sources of estimation uncertainty.





a. Principles: i. Only trade receivables based on actual and valid transitions should be incorporated in the statement of financial position.

ii. The most reliable evidence of existence of debtors are when their debts are settled after the end of the reporting period or the existence of a written confirmation of indebtedness by the Insured or a Broker in response to either a circularization letter or a reconciliation exercise.”Broker’s confirmation of indebtedness will be acceptable”

iii. There is a general market presumption that any premium debt above ninety (90) days is impaired. By these rule, all premiums not received after this period can be taken to be impaired, unless there are evidences of their collection after year end or history of proven payment pattern by particular debtors.

iv. By operation of the law, all budget allocation for recurrent expenditure on Government Ministries, Department and Agencies( MDA) other than those with independent sources of funding, that are not spent by end of each fiscal year are expected to be returned. Thus any premium due from such organizations cannot be expected to be paid, except such funds have been paid and are held by co-insurers. Government debts are therefore not expected to feature as part of outstanding premium.

v. Assessment of debtors for impairment is first done on individual before collective basis.



b. Gaps. The following have been observed from financial submitted for our review i. Information provided to prove the existence of outstanding premium is inadequate.

ii. Assessment of individual and collective impairment on premium debts based on brokers instead of individual policy holders.

iii. Disregarding market agreement which considers any premium debt above ninety (90) days as impaired.

iv. Non-impairment of premium receivables from MDAs remaining unpaid as at end of the year 31/12/2012.



c. Improvements Expected: i. sufficient information to prove the existence of outstanding premiums in excess of N 400,000, should accompany annual returns.

ii. The individual and collective impairment assessment should be based on the individual policy holders and not on brokers as the credit risk is more on the insured rather than on the broker. Brokers profile can only be used in respect of premium collected by such brokers awaiting remittance.

iii. The collective impairment should be based on groups that have similar credit risk characteristics. Grouping applied must be appropriate.

iv. The impairment test should be based on incurred loss model and the basis applied must be reasonable.

v. Premium debts above 90 days market agreement should be considered impaired

vi. Any premium debts relating to Government accounts for which payments have neither been received after year-end nor proven to be made to co-insurers who are holding same in trust should be considered impaired.

vii. Statement of premium received but not yet remitted to the Underwriter, should be obtained and submitted with the annual returns.

viii. All premium included in the financial statements for the year ending 2012 will be verified by the Commission. Where trade receivables are subsequently found to have been misstated, correction will be effected as prior year adjustment in 2013, disclosure of such deliberate misstatement will be made in the Financial statements and other sanction deemed fit by the Commission will be imposed.

ix. Underwriters are hereby reminded that the requirement of the Commission for periodic reconciliation of accounts with brokers is still operative. Appropriate penalties will be imposed in 2013 on any cases of non-compliance with the guideline.




a. Principles: Investments in unquoted equities shall be measured at fair value. Where the fair value cannot be reliably measured, they should be carried at cost less impairment loss.

b. Gaps i. Fair value (valuation) model were not based on reliable and verifiable market information.

ii. Those measured at cost were not objectively tested for impairment.


c. Improvements Expected: i. Fair value of unquoted investment should be based on reliable and verifiable market information.

ii. The information used for the fair value should be documented and details provided to the Commission.

iii. When the carrying amount is based on cost, this fact should be disclosed as well as t explanation as to why their fair value cannot be measured reliably.

iv. Unquoted investments valued at cost should be objectively tested for impairment. The impairment model should be properly documented and details provided to the Commission way ahead of the annual return.




a. Principles: Reporting entity achieves a fair presentation by providing among others, relevant IFRS disclosure requirements to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance.

b. Gaps: Non disclosure of the following: i. Capital management with regard to externally imposed Capital Requirements, the consequences for non-compliance and efforts made to meet the requirements.

ii. Claims development - History of actual claims compared with previous estimates.

iii. Maturity Analysis of financial assets and financial liabilities.

iv. Information that enables users evaluates the nature and extent of risks arising from insurance contracts.

v. IAS 1 disclosure requirements on.

1. Current and non-current portion of assets and liabilities.

2. Distribution of profit or loss and total comprehensive income between owners of the parent and non-controlling interest;

3. Presentation of items in other comprehensive income into those that may be reclassified subsequently to profit or loss from items that may not be reclassified subsequently to profit or loss.

4. Separation in the Statement of Changes in Equities of items of total comprehensive income from the transactions with the owners of the entity.

vi. Fair value hierarchy for fair value measurements recognized in the financial statements for each class of financial asset.

vii. Non disclosure for financial instruments, the basis of classification and valuation technique used and assumptions applied in determining fair values for each class of financial assets or liabilities.

c. Improvements Expected: Relevant disclosure requirements, such as those listed above and others as required by respective IFRS should be appropriately presented.




a. The financial statements submitted to the Commission will be subjected to post approval validation, including evidence of parties in the financial reporting supply chain having performed their expected role according to relevant laws, regulations, guidelines and professional standards. Directors, Auditors, Actuaries and others who certified data, included in the financial statements will be held accountable for their role in financial reporting according to prescription of extant laws.

b. All errors or omissions discovered will be required to be corrected according to the requirements of IFRS. In addition, the Commission will require their special disclosure in the financial statement for the year ending 2013 as evidence of the quality of corporate governance and audit attestation. Where appropriate, affected financial statements will be restated.

c. The attitude of Insurers to the determination of the existence of debtors and unquoted securities as well as their testing for impairment is a cause for concern. Debts and unquoted investments that cannot be proven to exist should be reversed and not considered for impairment. The issue of high level of outstanding premiums and its suggestion of fictitious premiums income is creating a reputational problem for the industry. The transition to no-premium-no cover regime should not be taken as an excuse for financial statements to be loaded with any fictitious premiums as shareholders, investors and users of financial statements are going to depend on them to make decisions.

d. The signatures required on the Financial Statement should include their FRC Registration number.

1. Chairman Board of Directors.

2. CEO.

3. CFO.

4. Chairman Audit Committee.