Divestment: NIA abandons troubled firms

Divestment: NIA abandons troubled firms

Chuks Udo Okonta

The Nigerian Insurers Association (NIA) has told bank-owned insurance firms that are yet to find investors to carry their cross alone Inspen has learnt.

Investigation reveals that the association which is expected to play a fatherly role in the divestment process has abandoned the affected companies to weather the storm alone.

Of the 17 firms affiliated to banks, only two have successfully divested a situation which is causing frenzy in the industry.

It was learnt that the position of firms affiliated to banks that merged or were acquired in the last banking recapitalisation is dicey as the new banks are still sorting out issues with the inherited portfolios.

A member of NIA who spoke on the position taken by the NIA said it is not the responsibility of the association to ensure any company remains afloat. He stressed that it is not NIA’s role to encourage members to acquire trouble firms.  He said NIA does not promote ownership of a company, adding that it only deal with companies that are in existence and are licensed by NAICOM.

He said: “From our point of view, those bank sponsored companies have not contravened any law. What the insurance industry was against was the kind of universal banking they wanted to introduce years back, whereby a bank would not need an insurance license to transact insurance business.

“The approach then was that you just walk into a bank; you would see a savings department, current account and insurance department. That type of practice was unethical and we opposed it. Our position was that any individual who wants to establish an insurance company must adhere to the Insurance Act.

“If the Central Bank has problems with them, that is their problem not NIA’s issue. If the Central Bank tells them to closed down, there are provisions in the Insurance Act for closing down of an insurance company either life or general business. If the companies are to transfer ownership there are provisions in the Act for that.

“We do not have a stake in who holds an insurance company, our stake is that once any insurance company is existing and a member of the NIA, we would protect the interest of the company and encourage it to operate in accordance to the law of the land. So, the divestment has nothing to do with the NIA.”

The Commissioner for insurance Fola Daniel said the National Insurance Commission (NAICOM) is on top of the divestment process, adding that the commission has put in place measures to ensure stolen funds are not used to recapitalised bank-owned insurance firms.

He noted that NAICOM would screen local and foreign funds to be invested in the firms to ensure they do not contravene the Money Laundering Act. He said the commission would forestall developments where individuals with questionable fund hijack the firms.