Wednesday 12 November 2014

NAICOM dares insurers on claims of over-regulation


Daniel
Chuks Udo Okonta

The National Insurance Commission (NAICOM) has asked insurance operators to prove how its regulatory activities stifled their performances.

The Commissioner for Insurance Fola Daniel, said this in Lagos, adding that some insurers in spite, the considerations made by NAICOM against the backdrop of massive investment losses following the capital market crash of 2009/2010, go about complaining of over-regulation, saying the regime of fines and penalties has become punitive.

He noted that this is most unfortunate, as the operators have made this avoidable scenario look more important than driving growth and value.

"So far, your members are yet to demonstrate how regulation stifled the performance of insurance companies. It is pertinent to note that every report from international organisations and rating agencies have continued to rate the Nigerian insurance industry as being under-regulated.

"From the audited financials of nearly a dozen insurance companies, solvency gaps are recurring features of their activities for as much as three consecutive years. Appropriate regulation should have resulted in either suspension of the operating license and possibly withdrawal.

“The Commission had chosen to show some understanding against the backdrop of massive investment losses following the capital market crash of 2009/2010. Whereas other sectors have achieved reasonable recovery, insurers and NAICOM may no longer be able to invoke the excuses of the market crash as justification for the poor turn of event.

“The Commission shall therefore have zero tolerance for solvency gaps in the ensuing year in the interest of the insuring public and for the avoidance of exposure of NAICOM to regulatory risk," he said.

On late submission of audited report, Daniel said, "Whereas the Insurance Act 2003 provides for submission of annual accounts no later than 30th June, the requirement by the Nigerian Stock Exchange for listed companies is 31st March. The Commission had in the past continued to plead for the sector with other regulators for forbearance. Will this qualify for over-regulation?

"Some of your members do not submit annual accounts before Christmas. Going forward, insurance companies must comply with all requisite regulatory requirements without plea subsidies from NAICOM."

He said the commission has resolved to issue appropriate regulations that would enthrone these best practices.

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