Insurers want good treatment from oil and gas firms

The Nigerian Content Policy on insurance was meant to expand the operations of insurers, but President Nigerian Council of Registered Insurance Brokers (NCRIB) Mrs Laide Osijo, said in this interview with Chuks Udo Okonta that harsh conditions laid by oil and gas firms may erode the the benefits of the policy.

How did the insurance industry fared this year?

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. On the entire industry, we tried, but had lots of challenges. Our performance this year is better than last year, for the Gross Domestic Product (GDP) is a bit high than that of last year. Our challenges is in the area of receivables, which means that we had a lot of businesses, but little income in our treasure. With that we cannot say we are home and dry. I think with the introduction of no premium no cover which would start next year, there would be a new thing in our operations.

How have brokers and underwriters managed their rift on premium collection and remittance?

What the present administration in National Insurance Commission (NAICOM) has done to bring sanity in the industry is a good thing in the right direction. The idea of underwriters accusing brokers of non remittance of premium will now be a thing of the past with the introduction of no premium no cover. According to the Commissioner for Insurance Fola Daniel, when they were doing verification of accounts of brokers and underwriters, they observed that most of the outstanding premium that brokers were accused of, were not actually true. Some of the underwriters raised their books to cover their expenses. NAICOM observed the mis-representations and sanctioned the errant underwriters. Some brokers who erred by keeping premium beyound the stipulated date were also sanctioned. I am not saying that brokers are perfect, but most of the accusation by underwriters are not really true. NAICOM observed that most of the withheld premiums are receivables. For an example the Head of Service insurance and other businesses done last year, their premium are yet to be paid. The Group life of Head of Service, only 25 per cent of the total sum was paid. The money was paid after some of us went to plead for its release. Up till now, I am yet to receive my commission from the group life account. Is this the type of businness that will increase the industry's growth? With all these challenges, I am of the school of positive thought that no premium no cover policy should stay. If you have your premium, we would give you cover, but if you do not have there would be no cover. We envisaged that there may be a problem with the policy. This may arise when brokers agree to abide by the guidelines and reject businesses without premium and the underwriters go ahead to release the policies. Some brokers have been asking me this question on what have been done to ensure that underwriters would not subvert the guidelines by releasing policies they rejected. I have told them to report underwriters who by-pass them to take a business they rejected. We have all agreed to abide by the policy, for it would bring sanity to the industry. We are prepared to abide by the rule, we have educated brokers and they are all ready to comply.

Would the NCRIB take up these envisaged challenge to NAICOM?

I was at Abuja where the no premium no cover was made known to underwriters and brokers by NAICOM. Desk officers of ministries, departments and agencies were also at the forum and the issue was thoroughly discussed.We have agreed with NAICOM to call the stakeholders in the insurance industry - representatives of the brokers and underwriters to sit and chart the way forward for the implimentation of the policy. We have to agree on the modalities. It is during that meeting that we will raise this and other challenges that we envisaged that may clogged the policy. These issues are foundament to the operations of brokers, for 80 per cent of insurance business in the country is done through brokers. If we follow the law and underwriters refuse to follow, the whole thing would be a mess. We would try to ensure we get the modalities as to how to go about the policy.

How would the industry manage government's delay to premium payment in the no premium no cover regime?

Earnestly, government is the highest spender and they are to pomote the insurance industry. What the government should do because of delay in implimentation of the budget, is for most agencies to move their renewer period from January to April ending or June. If they do that, they would have enough time, after the budget is released to get their premium. I believe the Commissioner has discussed that with Perminent Secretaries. We believe the issue should also be discussed with the legislators to encourage government to place insurance first in the budget. We envisage the first year is a toothing period, hence all the challenges encountered will be addressed as we make progress. The policy is a good thing in the right direction for it pays the brokers, underwriters and public better. With the policy, once the public pay their premium, their claims would be effected promptly.

How have brokers fared in oil and gas business?

Honestly, in the area of oil and gas, the Nigerian Content Act made provision for local operators to be trained, so that the business could be handed over to us. But the way those oil and gas operators are doing things are contrary to what is expected. What they are asking for were never envisaged when the law was provided. The Nigerian National Petroleum Corporation (NNPC) is really putting more demands on brokers. We are worried because we thought we would acquire more knowledge as we grow on the business, but reverse is the case. We have undertaking oil and gas training at home and abroad, but with the restrain by the oil and gas operators, we can never put to test what we learnt. With the things they are asking for, barely can 10 brokers or even five qualify for the business. If they are doing it intensionally, where then is the local content law? We were supposed to be trained so that the foreigners would hand over the businesses to us. If we are not given the practical training and exposure, how would we learn? It has been unfair, but we will continue to strive until we get there. The first time they did it, we had 34 brokers engaged, and the next, we had 14. We thought after getting 34, we would have higher rate,but they went and reduced it. This year, they put so many conditions and at the end only few brokers will also be engaged. It is unfair to the local content law. The local content law is there to protect us and put food on our table, but the way they are asking for so many things, is really disturbing. We would continue to strive to meet their demands. Honestly, the brokers are complaining. They are not happy about it, most of them have paid so much to certify many documents. Corporate Affairs Commission (CAC) gave us certification, but they still want us to certify it. And they would give us short period within which they want us to impliment these things. People have spent much money going to Abuja due to much requirements by the operators. Many brokers have written petitions to my office, for we to answer were they belong in the local content, but I do not know how to answer them, for NNPC is not given us fair treatment.

Is there any role NAICOM can play to remedy this situation?

There is little or nothing NAICOM can do when it concerns insured and underwriter. They are our regulator. The only where they can come in is when the oil and gas operators admit people. The operators would send the list of engaged insurers to NAICOM to comfirm whether they are registered and have the wherewithal to handle the risks. Once an operator is qualified, done many training and spent so many years in the industy he will be approved by NAICOM, but that does not mean NNPC would pass the operator. Issues on insurer client relationship, NAICOM always draw back. They would say the insured has right to ask for any thing. NAICOM can only appeal to the oil and gas operators. The only people that could help us are the legislators for they made the law.

How is NCRIB handling issues on indiscipline among members?

On the issue on lapse policies. NAICOM lapsed almost 100 brokers. The reason for lapsing them is because most of them refused to renew their policies. The NCRIB law allows us to renew our registeration every two years and any operator who fails to renew his registeration lasped. The renewer does not just centre on financial obligations, but the operator must meet all the requirements. This is because we have our standard rule that is used for renewer. Once one is able to meet the conditions, his license would be renewed. If a firm has a new chief executive, the person has to come to us to check if the person is fit and proper to run the organisation. This is because the new executive would be held liable for any thing that happened in the firm. If an organisation changes its executive, it has to write us and we would give it six month to present the excutive for examination. If an operator failed to meet up with his financial obligation, his membership will lapse that also is what NAICOM is doing. We have observed that some people just register a company because they want to secure a business due to the influence of their relative that is in power. Once they get the business, they would abandon their brokering business. Others just want to be managing director. Instead of 10 people joining hands to form a strong firm, they want to be managing directors. We have always encouraged mergers and acquisition. If you have a formidable team, it is better than been alone. We have already told our members that by March 31, our register would be closed for 2013. And we would publish the list of members on our website and newspapers. We also send the list to our clients. By first week of April, list of our members would be out. Our rule states that we should publish list of members every year. I must not forget to comment the effort of the Commissioner for Insurance for his efforts in promoting the affairs of the council. Our law says that registeration with NCRIB is requirement for licensing by NAICOM. Before this year, so many brokers have been going to NAICOM, for registeration. But since the beginning of this year, NAICOM has refused to give any body licence if they did not have the NCRIB registeration certificate. The Commissioner with his team have been doing a good job to ensure people comply with the rules.

How does the council ensures those deregistered do not continue to practice?

We have a mechanising to that effect. In my inaugural speech, I told brokers fraternity that I would empower the Area Chapters. And I have really done that. I have empowered them through qualitative service. I went a step further by touring the six geographical area chapters, to make them work in line with the secretariat. I told them that all brokers in their region are known and ensure that they are registered members of that chapter. With that at the back of their mind, they would pay their subscription and attend members activities which carry Mandatory Continuous Professional Development (MCPD) points. With these, they would be able to discover genuine brokers. We have told those at the Area Chapters to enter any office with sign of a brokering practice and ask for the particulars of the person. We have mandated brokers to glaze their licenses in their offices and to put NCRIB logo on their letter head papers. All these we have put in place to disabilised charlantans. So far, some brokers have been reporting brokers that are not registered and we have been educating them on what to do to be our members. NAICOM efforts have really helped to stop those who want to operate without our approval. The step taken by NAICOM has helped us to have a harmonised data base of brokers. For before, if NAICOM has 600 brokers, the NCRIB would have 400. This has really helped curb the activities of charlantans.

What is your take on the performance of the MDRI?

I think the government has a lot to do. Some of the compulsory insurances are not enforced. NAICOM has tried its best supporting the industry, by making some businesses to be compulsory under the Market Developement and Restructuring Initiative (MDRI). But the implimentation and enforcement lie with the government either at state and federal levels. If at the state level, hostels, hospitals are made to effect insurance by the local government, they would do it. The local governments have a way of collecting rates, that can be deployed to collect the premiums. At the grassroots, the agents need to do their jobs. The brokers are wholesalers, they want oil and gas and other big accounts from the federal governments. They neglect retail business where there are more money. We have so many graduates searching for jobs, if the brokers engage them to go to the grassroots, pay them good money and training, we would achieve more on the MDRI. We still have a long way to go, I must be frank with you. When I go any of the local chapters and get complain of lack of business, I always ask them if they all are after government accounts. And why not go to the grassroots since they are closer to people there. I tell them to look at businesses at the grassroots and forget businesses in Abuja. That is why I respect Mutual Benefits Assurance Plc. It is one company that is really promoting micro-insurance in Nigeria. They are doing very well and making money in the business. Other big companies, are too big that they do not want small things at the grassroots. With about 168 million people in the country, we have a lot of businesses to do.

What are the things that would drive insurance next year?

I believe the indstry will grow when the mandatory insurances are enforced. Also adhering strictly to the no premium no cover policy, practising professionally and avioding unethical competition among brokers and underwriters. There should also be progressive government policies and early implimentation of the budget. The budgetary provision for insurance should be strictly used for the purpose not diverting it to other purposes.