THE regulatory environment in the nation's insurance industry may be increasingly too hot for corrupt underwriting, brokerage companies to contend, as the National Insurance Commission (NAICOM) in partnership with other regulatory bodies in the financial services sector are on the offensive to reduce sharp practices in the underwriting of insurance business in the country.
Apparently determined to restore the image and trust of the public in the industry, the Commissioner for Insurance, Fola Daniel, told The Guardian "The action has become necessary as a cursory look at recent occurrences in the sector will reveal that the insurance industry is at a very critical cross road as regard its operations and regulation. Legislations and guidelines are flouted at will by operators and consumers alike, non-adherence to the provisions of the law, delayed claims settlement, rate cutting and other sharp practices in the industry."
As a result, the management of the industry regulatory body - NAICOM has sought the collaboration of regulators of other financial services bodies to stem the tide and bring sanity to the industry.
For instance, during the visit of NAICOM management team to Securities and Exchange Commission (SEC) top management in Abuja, the two bodies agreed to partner in the interest of investors in order to boost enforcement against insurance and brokerage firms who misappropriate funds raised from the capital market.
The Deputy Commissioner for Insurance (Technical), Muhammad Kari, during the visit highlighted a few cases currently being investigated by the Commission whereby funds raised from the capital market had been diverted, misappropriated and used for personal gains. According to him, the cases necessitated the involvement of SEC as apex regulator of the Nigerian capital market with the responsibility of protecting investors.
In his remarks, the Acting Director General of SEC, Mounir Gwarzo, spoke of closer cooperation between the two regulatory organ to ensure that erring persons or institutions are swiftly brought to book. "We are ready to work closely with NAICOM to resolve these cases" Presently, collaboration between the two institutions happens within the framework of the Financial Services Regulation Coordinating Committee (FSRCC), he said.
Gwarzo, however, believes collaboration could be even stronger and more result oriented if the two bodies were to set up an inter-agency committee. The FSRCC was established to facilitate collaboration across the entire financial system. But beyond that platform, we need to create an inter-agency committee involving specific contact persons between our two institutions who will strengthen the synergy between our respective areas of oversight, he said.
It will be recalled that in August last year, the commission enlisted the assistance of Independent Corrupt Practices and other related offences Commission (ICPC) to come into the insurance industry to investigate infractions in the industry.
The corrupt practices commission which has investigated the tax systems, the banking, educational systems as well as ministries, department and agencies, visa-processes and land allocation system in the FCT in the allocation system in the FCT in the past two years, has stated its resolve to wade into the insurance industry with the aim of ensuring that the sector, which biggest products is integrity, begins to live up to expectation.
NAICOM boss speaking during a courtesy visit to the anti-graft commission in Abuja last year, said "It was imperative to invite the ICPC to look into the insurance industry because NAICOM was willing to flush out fraudulent insurers and brokers and thereby make insurance a desirable product for the Nigerian public, including government agencies nationwide.
He explained that the industry which currently has about 600 insurance brokers is affected by a trend of 'bloated premiums', which is in itself, a source of huge corruption. He said that when a policy subscriber is over charged for a policy (bloated premium), if the excess is returned through a third party, it is prone to corruption, which is the reason we have insisted that when such excess is returned, it must not be through a third party."
He urged the ICPC to look into the sector and help sanitize it, an offer which the anti-graft commission readily accepted.
The Nigerian Stock Exchange officials also warned operators in the industry to follow global best practices with adherence to rules for listed companies, otherwise, companies that violate listed rules would be heavily penalized.
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