NAICOM to suspend underwriters' license on cover without premium

Chuks Udo Okonta

From January 1, 2013, any underwritering firm that provides insurance cover without collecting the premium would be liable to a penalty of N500, 000 or lose its license, the Commissioner for Insurance Fola Daniel, has said.

He disclosed this in a Circular on 'No Premium No Cover' made available to Inspen, adding that all insurance covers shall only be provided on a strict 'no premium no cover' basis. He noted that consequently, only cover for which payment has been received, directlt by the insurer or indirectly through a duly licensed insurance broker, shall be recognised as income in the books of the insurer.

He said any insurer, who grants cover without having premium in advance or premium receipt notification from the relevant insurance broker, shall be liable to a penalty of N500, 000 in respect of each cover so granted , and in addition, may be a ground for suspension of of the license of the insurer.

He said irrespective of period of insurance, insurers shall ensure that at any point, they have received directly or indirectly, through the insurance broker the full premium in advance for cover being granted.

Daniel noted that all brokers should within 48 hours of receiving premium on behalf of any insurer, notify the insurer in writing in each case, of the receipt of such premium, adding that all such notification shall be accompanied by the broker's credit notes, acknowledging indebtedness to the insurer. He said upon the receipt of such credit notes, the insurer shall issue cover and forward the policy documents along with the related debt notes to the broker.

He said any broker who fails to notify the insurer of any premium received on his behalf shall be liable to a penalty that is not less than N250,000 in each case of failure to notify.

He mandated insurers to notify the NAICOM, not later that 30 days from the end of every quarter, of all premiums acknowledged as having been received by brokers or lead insurers, but not remitted to them, adding that any insurer who fails to render such return, shall be liable to a penalty of N5000 for each day of default.

Daniel urged insurers and brokers to reconcile their accounts not later than March 31, 2013. He enjoined brokers and lead insurers to notify the commission of premium received and unremitted to insurers, not later than 30 days from the end of every quarter.