Trouble looms as pension transfer window opens

Chuks Udo Okonta

The quest by some Pension Fund Administrators (PFAs) especially the smaller firms, to increase their subscribers base through the transfer window may create room for unhealthy competition among others if not checked, Inspen can reveal.

Investigation has shown that smaller pension fund administrators are pushing hard for the opening of the transfer window to enable them capture contributors that are presently dis-satisfied with their PFAs.

Industry observers believe this may bring about demarketing, which is rampant in the financial services sector. The observers noted that the industry regulator - National Pension Commission (Pencom) must place stringent laws to deter operators with such notion.

They maintained that the industry can only continue to thrive if there are trust and cooperation between operators and the public, noting that introduction of falsehood or demarketing by operators in a bid to increase their market share would stem the growth already achieved by the industry.

A source in Pencom said the commission has noticed that smaller firms are eyeing the transfer window to increase their stake. The source said the commission has urged those eyeing the window as gold mine, to be creative and harness the huge untapped opportunities provided by the numbers of un-registered workers.

The source said the smaller PFAs which are mostly those that were registered last, believed the firms that were first registered have the largest share of the market and that opening the window would help increase their share.

The person noted that PenCom would never rush into opening the window, adding that the commission must ensure that the transfer is seamless at take-off, before it will be set open.

PenCom has said it is still sorting out issues that has to do with data, adding that it is working hard to forestall the challenge of multiple registeration which can mar the system if not properly done.

Past CIIN president Adetunji Onalaja passes on

 

Chuks Udo Okonta

The family of Adetunji Onalaja has announced his passing on at the age of 83years. He would have been 84 years on the July 4, 2013. Onalaja passed on on Saturday March 23, 2013 according to a letter signed by Mrs. Olayemi Badewole (Nee Onalaja).
A statement by Head Corporate Affairs Chartered Insurance Institute of Nigerian (CIIN) Joseph Obah, said the late Onalaja, an icon of the Insurance Profession, hails from Ago-Iwoye in Ogun State of Nigeria.
He noted that he became President of Chartered Insurance Institute of Nigeria in 1985 and served the Institute meritoriously in that capacity and thereafter.
"An astute professional, Onalaja was in the employment of Royal Exchange Assurance Plc for over 30 years and rose to become the company’s first Nigerian Managing Director. He joined Royal Exchange in 1949 and became its Chief Executive Officer in 1980 after 31 years in the company’s employment.
The entire insurance industry and the financial services sector will miss this icon who qualifies as one of those who pioneered what has turned out to become a vibrant sector of the national economy," he said.
President of CIIN, Dr. Wole Adetimehin described the late Onalaja as a respected Elder of the insurance industry and an astute professional. He said Onalaja’s exit would leave a vacuum which no one else could occupy, describing him as one of the icons of the profession.
The Institute noted that it will be in touch with the Onalaja family in tracking developments pertaining to his burial in due course.

Standard Alliance Group trains directors, audit c’ttee on IFRS/ERM

Chuks Udo Okonta

Standard Alliance Insurance Plc and Standard Alliance Life Assurance Limited have said they organised training on International Financial Reporting Standard (IFRS) and Enterprise Risk Management (ERM) for their directors, audit committee members and key management to equip them for better performance.

A statement by the underwriting companies’ Group Corporate Communications Manager, Nelson Egboboh, said the two-day training session held in Lagos.

He said: "The training was important to make our directors, audit committee members and key management staff conversant with the International Financial Reporting Standards and risk management practices."

He said the training was strategic, especially as the participants were the brain behind the success stories of the organisations, adding that with this training, the firms are sure of raising and making their standard of handling financial reporting and risk management issues a template for the insurance industry in Nigeria."

Egboboh listed directors that attended to include Aliyu Yahaya Sa’ad, (Chairman, Standard Alliance Insurance Plc), Olorogun O’tega Emerhor (the company’s Vice Chairman and Chairman, Standard Alliance Life Assurance Limited), Ayo Ajayi, Dr. Ramsey Mowoe and Bode Adediji.

Other directors included Ede Osayande, Omolola Oshiafi, Rhe Emerhor-Iwuagwu, Messrs. Tom Imokhai and Austin Enajemo-Isire.

It could be recalled that the Financial Reporting Council of Nigeria and the National Insurance Commission (NAICOM) make it mandatory for companies to train their directors and other key management staff to enhance their knowledge about international best practices.

NAICOM resolves N1.2bn claims payment in 2012

Chuks Udo Okonta

National Insurance Commission (NAICOM) has said a total of N1,2 billion claims were settled through its intervention in 2012.

A statement by by Assistant Director Corporate Affairs NAICOM, Lucky Fiakpa said the claims were settled from 52 cases brought to the commission.

He noted that the claims dispute resolution related to Motor, Marine and Life insurances as well as Bond Issues and Pension matters, adding that the complaints were received from individual policyholders, beneficiaries, government agencies, SERVICOM, Legal Aid Council and Public Complaints Commission.

He said: "During the year, the Complaints Bureau handled a total of 349 cases, 86 of which were fresh complaints with the remaining 263 being ongoing cases.

The increase in the number of complaints received was as a result of the various publicity campaigns embarked upon by the Commission which has made members of the public and, in particular, policyholders to be more informed of the Commission’s window of dispute resolution, which is not only effective but timely.

The Complaints Bureau discharges its responsibilities either through correspondences with the insurance companies’ involved or through adjudication. During the year under review, a total of nine adjudication meetings were held while majority of the disputes resolved were through correspondences."

He noted that it is noteworthy that the response and cooperation of insurance companies involved in any dispute with policyholders has been very encouraging, stressing that during the year, not less than 85 per cent of the insurance institutions responded to queries or directives issued by the Commission for claims settlement.

He said the Complaints Bureau is the Unit solely responsible for receiving and processing complaints against insurance companies for non settlement claims in the Commission.

　

'How PFAs demarket annuity business'

Chuks Udo Okonta

Insurance firms with pension subsidaries are the ones enjoying annuity business the Managing Director of Life Insurance firm, has alleged.

He told Inspen that a
nnuity business ought to be thriving, but it is still out of reach of some insurance companies due to the attitude of some Pension Fund Administrators (PFAs).

He noted that the money life operators ought to obtain from annuity is being withdrawn by the PFAs, adding that instead of PFAs to focus on programme withdrawal, they go about marketing the same person an insurance company is prospecting.

He said: " We expected annuity product to be thriving in this economy. But as far as the business is concerned, it is still out of reach for insurance companies. The major reason is the money that need to be withdrawn from the PFAs are being held on.

"I have done many proposal, I have done many presentation with oil companies and construction companies, but the PFAs are saying, let the money stay with us. "Whatever insurance companies can do for you, we will do it for you and the Act covers it for them.

"Annuity is still very low in our market, except insurance companies that has a PFA are the one enjoying it. It is a product that suppose to be thriving well. That which is suppose to be brought to insurance companies are being held on to by the PFAs. It is not a case of saying they withheld it. It is a case of PFAs marketing the same person an insurance company is marketing, that is the experience.

"And when you think you have close a deal, the man comes to you and said my PFAs said they could still give me the same thing. The same structure that you said you will pay me on monthly basis, they said they will pay it.

"When I said withheld, I did not mean that they will not release the money, but they are ready to give them whatever you have proposed to them. It is like indirectly, the PFAs is accepting the annuity too."

He noted that life operators would continue to do their best to provide good services on annuity as provided by the Pension Reform Act 2004.

Pension scam validates contributory scheme - PenCom

Chuks Udo Okonta

The National Pension Commission (PenCom) has said the scam that rocked the old pension system has validated the need for the public to embrace the contributory scheme which gives no room for fraud.

A source in PenCom said the pension scam has helped the commission to advanced the crusade on the need for the public to believe and abide with the contributory scheme which was designed due to the irregularities observed in the old scheme.

The source said the commission in collaboration with the Pension operators and other stakeholders are working hard to ensure safety of funds contributed by subscribers in the new scheme.

The person expressed misgivings over the low numbers of subscribers in the new scheme, adding that it is still a far cry as there are about 40 million workers in the country.

The source maintained that the commission is working hard to integrate employers in the informal sector into the scheme, stressing that getting small business operators to embrace the scheme, inadequate education and enlightenment remain a great challenge to the industry's growth.

It was learnt that to encourage more people to embrace the scheme, the commission hopes to introduce customers service index, which would ensure that customers get better services from PenCom and operators.

PenCom said it has continued with its regulatory and supervisory philosophy, which is risk-based and consultative, adding that the Retirement Savings Account (RSA) transfer clearing system application that would be used to coordinate the processes relating to the transfer of retirement savings accounts is being developed and tested to ensure that it meets the capacity and robustness required.

Experts want compliance certificate to enforce MDRI

Chuks Udo Okonta

Insurance experts have called on the National Insurance Commission (NAICOM) to adopt the use of compliance certificate in enforcing the compulsory insurances in the Market Developement and Restructuring Initiative (MDRI).

They told Inspen that introduction of the certificate would make the public bidding for government businesses comply with the law on compulsory insurance.

The President Chartered Insurance Institute of Nigeria (CIIN) Dr. Wole Adetimehin, said the MDRI needs a level of law enforcement for it to thrive.

He noted that the presentation of compliance certificate by individuals bidding for government's businesses, have helped in adherence to group life policy of the Pension Reform Act 2004.

Adetimehin, noted that for the public to comply with the compulsory insurances, NAICOM should ensure there is a law to enforce it.

President Nigerian Council of Registered Insurance Brokers (NCRIB) Mrs Laide Osijo, called for colloboration with the government in the enforcement of the compulsory insurances in the MDRI.

She noted that though NAICOM has helped make some insurances compulsory, effort should be intensified on the enforcement of the laws.

She said: "I think the government has a lot to do. Some of the compulsory insurances are not enforced. NAICOM has tried in supporting the industry, by making some businesses to be compulsory under the MDRI. But the implimentation and enforcement lie with the government either at state and federal levels."

NAICOM has said it would review the operational guidelines of the MDRI to align it, for better performance.

The commission said the review is one of its programme for this year, but declined to give the time table for the review and release of the envisaged guidelines.

Some firms' 2011 accounts not yet approved, says NAICOM

Chuks Udo Okonta

The 2011 financial accounts of some insurance firms are yet to be approved due to irregularities the National Insurance Commission (NAICOM), has said.

Its Director Supervision Nicholas Opara, who disclosed this in Lagos, said the affected companies presented their accounts to the commission, but were sent back due to irregularities observed. He added that the commission would never approve any account that fails to meet the required standard.

He expressed misgivings over how most operators handle their accounts, stressing that underwriters lack justification for not producing standard accounts as they are given enough time by the commission to do so.

He called on shareholders to query the management of their organisations over the amount they pay for unnecessary sanctions.

Opara called on members of audit committee to ensure that their firms' accounts are well prepared, stressing that the NAICOM is worried over the role played by the professionals engaged by firms to oversee the production of their accounts.

Deputy Commissioner, Technical NAICOM, Ibrahim Hassan, said NAICOM has directed that all infractions should be well reported in the annual accounts of companies, adding that the step was meant for shareholders to raise questions during annual general meetings, stressing that what ought to be dividends are used by companies to pay avoidable fines.

National Coordinator, Pragmatic Shareholders Association of Nigeria (PSAN) Mrs Bisi Bakare, called on NAICOM to go beyond reporting of infractions in annual accounts of firms and ensure that firms state reasons for infractions to enable shareholders query them appropriately.

She noted that shareholders had at several fora sought from their organisations reasons for delays in the presentation of their accounts, and that the firms often attribute the delay to NAICOM's refusal to approve the accounts on time.

Sovereign Trust Insurance to sell products in local dialects

 

Chuks Udo Okonta

Sovereign Trust Insurance Plc said it has adopted a nationwide radio campaign in local dialects to sell some of its personal line products at the nook and cranny of Nigeria.

The company in a statement said the campaign is designed in two modes made up of programme sponsorship and airing of commercial jingles in Yoruba, Hausa and Pidgin in some selected radio stations across the major commercial cities in the country. The cities include Lagos, Oyo, Ogun, Port-Harcourt, Enugu, Sokoto, Kano and a host of others.

It said one of the major products on offer is the Sovereign Wellbeing Insurance Scheme for the Family (SWIS-F), adding that the product is a General Personal Accident (GPA) policy with varied features and benefits designed to cater for the Family in any situation of eventuality. The premium for this package is N1, 500 per annum.

It said the benefits range from out-of-work benefit resulting from any form of accident; covers medical expenses of the insured arising from accident, payment of wellbeing lump-sum and gives free cover for the 4^{th child under the age of 17. Features include 10% no-claim bonus, affordable and flexible premium payment, covers strike and civil commotion and has no geographical limitation.}

the firm noted that with the current campaign, it is set to promote products under the Market Development & Restructuring Initiative, MDRI.

"These products are basically designed to cater for Third Party liabilities whenever the need arises. They consist of the Third Party Motor Insurance, Occupiers’ Liability, Builders Liability and the Professional Healthcare Indemnity Insurance. For personal line products, prospective customers across the country can buy the Householders’/Houseowners’ policy, Fire & Burglary and All Risks Insurance for every of their private belongings in any of Sovereign Trust Insurance offices across the nation," it said.

Its Assistant General Manager/Head, Direct Marketing Lanre Ojuola,said the move to embark on the radio vernacular campaign became necessary to erase the impression that insurance is only meant for the rich and mighty.

"We have carefully studied the market and came to the conclusion that a greater percentage of our prospective customers reside in the grassroots areas and could be denied the opportunity of knowing what benefits they could derive from having an insurance cover, hence, the need to take this information to them via the local languages on radio stations," he added.

He noted that the initiative is in line with the company’s mission of ‘enhancing the everyday life of its customers’ across all sectors of the Nigerian economy and social class.

The company’s spokesperson, Segun Bankole noted that the adaptation of the media campaign in vernacular is to further entrench the Brand’s recall rate amongst the identified social class with a view to developing strong business opportunities in those climes.

He said the programme sponsorship is geared at educating this particular class of people on the need to make insurance a priority in their daily life.

Its Managing Director Wale Onaolapo said "The idea behind the initiative is to ensure that the generality of the target audience are well covered and can easily connect with the product and make informed decision in taking any of the policies applicable to them.

"Our expectation of this campaign is that the target audience which cuts across, Teachers, Traders, Mechanics, Carpenters, Fashion Designers, Hair Dressers, Casual Labourers et al in the non-formal sector of the economy will avail themselves of the opportunities embedded in insurance."

He noted that the company launched the SWIS-F product in 2008 and has since been enjoying patronage from different socio-economic groups in the country but that this campaign would help enhance a larger coverage of prospective customers in localities yet to benefit from the product.

NAICOM takes insurance awareness to schools

Chuks Udo Okonta

The National Insurance Commission (NAICOM) is presently working on a blueprint that would enable it take insurance awareness to schools, Inspen has learnt.

Its Deputy Commissioner, Technical Ibrahim Hassan, who disclosed this, said the programme is aimed at reaching out to schools from primary to tertiary, adding that the commission is poised to inculcate insurance awareness in young people as most people seem to have developed negative perception about insurance.

He urged operators to be proactive and key into the enormous opportunities the commission has created to expand insurance business.

It was also learnt that the Chartered Insurance Institute of Nigeria (CIIN) is working out ways entrench insurance knowledge in schools.

Its President
CIIN Dr. Wole Adetimehin, said as part of the institute's strategic action plans, it intends moving round all ministries of education across the nation to canvass the implementation of the policy

He said: "In our favour, the Federal Government has made insurance West African Examinations Council (WAEC) and National Examinations Council (NECO) subject, where by, students have to offer insuurance from Senoir Secondary one to three.

"As part of our strategic action plans, we intend moving round all ministries of education across the nation to canvass the implementation of this policy. We have been to the Federal Ministry of Education and we have gotten all the curriculum for the schools, now we are partnering the Federal Ministry of Education in enforcing or compelling all the states' minitries of eduction to implement this new agenda."

He said the institute is already commissioning people to write text books on insurance in line with the curriculum, adding that the effort would at the same time create jobs for members of the institute.

The Federal Government in a bid to deepen insurance awareness, last year, introduced a curriculum that would enable students acquire insurance knowledge at the secondary school level.

IFRS: Underwriters battle to produce compliant accounts

 .three firms sent drafts to NAICOM

Chuks Udo Okonta

Barely three months to the deadline for submission of last years' financial reports, only three out of the 60 insurance and re-insurance firms have so far sent their draft copies of International Financial Reporting Standard (IFRS) compliant accounts to the National Insurance Commission (NAICOM), Inspen has learnt.

The Director Supervision NAICOM, Nicholas Opara, who disclosed this at the workshop in Lagos, said the drafts were returned to the companies as there are still areas to be worked on.

He said last year's financial reports of operators are so special to the industry, as the reports herald the migration to the new financial reporting regime.

He said: "At the moment, no company has submitted full IFRS compliant account. Is was only three companies that have sent in their drafts, which we have returned to them as there are still many things they are yet to get right.

"The 2012 reports are special because it is different from what we have been doing in the past."

According to a roadmap to guide companies’ on transition to IFRS, insurance and reinsurance companies classified under public interest entities are expected to start their transition from January 01, 2011, while the insurance brokers classified under other public interest entities will take their turn in 2012.

The transition from the National Standard to IFRS was endorsed by the Federal Government on July 28, 2010, to take effect January 1, 2012.

Commissioner for Insurance Fola Daniel, on efforts by NAICOM to ensure the actualisation of the IFRS initiative said the commission has been engaging operators, auditors, directors and management of companies on how to seamlessly migrate to the initiative.

He said two main outcomes have been reached by NAICOM and stakeholders on the initiative, adding that first, it was agreed that the market should adopt common approach to IFRS provided that such option will not place any individual company or the market at a competitive disadvantage domestically and internationally. Secondly, it was agreed that an accounting practices committee made up of the representative of NAICOM, insurers/reinsurers and external auditors should be set up. The function of the committee is to address all accounting issues of concern to the industry including those emerging from IFRS standard setting process.

He said board of directors of each company are responsible for the issuance of financial statements, and that consequently, both transition and sustenance of IFRS in accounting practices, should be a major item on directors’ agenda at this time.

Daniel noted that NAICOM’s decision to engage stakeholders was informed by the need not only to create awareness of the implication of IFRS for financial reporting responsibilities but also to acquaint them with the scale of change and the sense of urgency in the attention it deserves.

"Our expectation is that at the end of our engagements, the stakeholders will have sufficient level of understanding as to know what critical questions to ask and what steps to take in the bid to ensure that their companies successfully transit to and embed IFRS in their accounting practices within the timelines specified in the Nigerian Roadmap. While saying this, it is important to note that we are committed to supporting the stakeholders in the process. For this purpose, we have set up an IFRS help desk in the commission to address issues that companies may have in the process of transiting to IFRS.

"We have succeeded in significantly improving the level of compliance with the Nigerian GAAP by getting some companies to amend their financial statements to reflect a standard we believe all operators should comply with, if their financials will be relevant and useful to both domestic and international users. The feedback we received from many informed users was encouraging. The price for this change for some companies was significant, as not only did they have to make major provisions that significantly impacted their shareholders fund, it took them quite some time to deal with our queries resulting in delays in the submission of the financials to the Nigerian Stock Exchange.

"In a bid to further improve on the quality of the financials of insurance and reinsurance companies, we released a proforma complete financial statement for comments by stakeholders. The key change that the document seeks to introduce is improved financial reporting from a disclosure perspective. We want to encourage companies to take advantage of the information in this document to improve both the presentation and disclosure of their audited financial statements. Perhaps it is important to say that companies that do not significantly improve their reporting along the lines prescribed stand the risk of being disadvantaged when their financial are compared with their competitors," he said.

　

NAICOM frowns at insurers high operating expenses

Chuks Udo Okonta

The National Insurance Commission (NAICOM) has expressed its misgivings over the huge proportion of insurance premium income that are deployed as operating expenses by insurers.

Deputy Commissioner, Technical NAICOM, Ibrahim Hassan, who spoke at the workshop for Executives of Shareholders' Association and Independent Directors of Insurance Companies organised by the commission in Lagos, said a situation where huge proportion of premium income ends up as operating expenses is not healthy for the industry.

He urged shareholders to always querry the management of their firms over misuse of funds, adding that NAICOM has directed that all infractions should be well reported in the annual accounts of companies.

He said: "The Commission has facilitated through the adoption of the International Financial Reporting Standard (IFRS), improvements in financial reporting practice in the insurance industry in line with international best practices. This should be able to attract foreign investment to the insurance sector.

"We also directed that all infractions should be well reported in the annual accounts of companies. This was for you to raise questions during annual general meetings because it is what should come to you as dividend that is being used to pay fines for avoidable offences."

He said the commission has through several initiatives created opportunities for underwriters to boost their operations, stressing that shareholders should colloborate with managements of their firms to reposition insurance business.

　

From left: Deputy Director, Corporate Strategy National Insurance Commission (NAICOM) Babajide Oniwinde; Deputy Commissioner, Technical Ibrahim Hassan and Director Supervision Nicholas Opara at the workshop for Executives of Shareholders' Association and Independent Directors of Insurance Companies organised by NAICOM in Lagos.

From left: Deputy Director, Corporate Strategy National Insurance Commission (NAICOM) Babajide Oniwinde; Deputy Commissioner, Technical Ibrahim Hassan and Director Supervision Nicholas Opara at the workshop for Executives of Shareholders' Association and Independent Directors of Insurance Companies organised by NAICOM in Lagos.

Participants at the workshop for Executives of Shareholders' Association and Independent Directors of Insurance Companies organised by NAICOM in Lagos.

Participants at the workshop for Executives of Shareholders' Association and Independent Directors of Insurance Companies organised by NAICOM in Lagos.

From left: Deputy Director, Corporate Strategy National Insurance Commission (NAICOM) Babajide Oniwinde; Deputy Commissioner, Technical Ibrahim Hassan at the workshop for Executives of Shareholders' Association and Independent Directors of Insurance Companies organised by NAICOM in Lagos.

From left: Deputy Director, Corporate Strategy National Insurance Commission (NAICOM) Babajide Oniwinde; Deputy Commissioner, Technical Ibrahim Hassan at the workshop for Executives of Shareholders' Association and Independent Directors of Insurance Companies organised by NAICOM in Lagos.

From left: Deputy Director, Corporate Strategy National Insurance Commission (NAICOM) Babajide Oniwinde; Deputy Commissioner, Technical Ibrahim Hassan and Mrs Toyin Bello at the workshop for Executives of Shareholders' Association and Independent Directors of Insurance Companies organised by NAICOM in Lagos.

From left: Deputy Director, Corporate Strategy National Insurance Commission (NAICOM) Babajide Oniwinde; Deputy Commissioner, Technical Ibrahim Hassan and Mrs Toyin Bello at the workshop for Executives of Shareholders' Association and Independent Directors of Insurance Companies organised by NAICOM in Lagos.

From left: Director Mutual Benefits Assurance Plc, Moses Ajaja, Group Managing Director Akin Ogunbiyi, Vice-Chairman Akin Opeodu and Managing Director Riskguard-Africa Nigeria Limited Yemi Soladoye at a media parley in Lagos.

From left: Director Mutual Benefits Assurance Plc, Moses Ajaja, Group Managing Director Akin Ogunbiyi, Vice-Chairman Akin Opeodu and Managing Director Riskguard-Africa Nigeria Limited Yemi Soladoye at a media parley in Lagos.

Mutual Benefits Assurance to launch 50 micro-insurance products

Mutual Benefits Assurance to launch 50 micro-insurance productsChuks Udo Okonta

Mutual Benefits Assurance plc has disclosed plans to roll out 50 micro-insurance products into the market beginning from April.

Its Group Managing Director, Akin Ogunbiyi, who disclosed this in a media parley in Lagos, said the first batch would be introduced by April, adding that the products were developed along social, demographic, trade groups and risks peculiar to each segment of the nation.

He noted that the firm has a projection to open 200 offices between 2012 and 2015, stressing that 32 offices were opened last year and that the number would reach 70 by December this year. He said the effort would bring existing and new offices of the firm natioanwide to 96 by the end of this year.

Ogunbiyi said the firm would create 22,000 new jobs by 2015 in line with the man-power need of the industry. He said the insurance group has staff strength of about 5000, of which 3000 are marketing executives.

He said the firm has 67 insurance professionals in its workforce, stressing that 24 states are to be covered by the firm by 2014.

He noted that to serve customers better, six regional hubs have been created in Lagos, Ibadan, Abuja, Enugu, Port Harcourt and Kano, stressing that each regional operation is headed by a Regional Franchise Administrator (RFA), while the state operation is headed by a Territorial Franchise Administrator.

He said to institutionalise customer focus, customer service officers, pupil risk surveyors have been created as job titles.

40 firms sanctioned over anti-money laundering training plans - NAICOM

Chuks Udo Okonta

About 40 insurance firms were last year sanctioned by the National Insurance Commission (NAICOM) over failure to submit their training plans on Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT) on time, Inspen has learnt.

The Assistant Director Inspectorate NAICOM, Sam Onyeka, who disclosed this in an interview, said the commission takes the issue of anti-money laundering and combating financing of terrorism compliance seriously, adding that measures that would enable all the operators to have a harmonised reporting system has been put in place.

He said: "NAICOM takes the issue of anti-money laundering and combating financing of terrorism compliance seriously, many companies were sanctioned for failure to submit their training plans on time as required. About 40 companies were sanctioned last year for failing to send in their training plans as required.

"Basically we have three types of reports - suspicious, currency and foreign transactions. Before now, the reporting system has not been uniform, some people report using information technology platforms while others report using copy versions. But now, we want to synchronise it, we want everybody to come on the information technology platform."

He said NAICOM would continue to improve on the level of anti-money laundering and combating financing of terrorism compliance in collaboration with the Nigerian Financial Intelligence Unit (NFIU).

Non-life accounts for 61.6% of last year's insurance premium, says report

Chuks Udo Okonta

A report by Researchmoz, world's renowed research agency has said the non-life segment of Nigerian Insurance Industry, accounted for 61.6 per cent of the premium underwritten by insurers, last year.

The agency which undertook in-depth market analysis, information and insights into the insurance industries in Nigeria, Gabon, Uganda, and Rwanda, said the Nigerian Insurance sector experienced strong growth over the review period, adding that the industry's growth was supported by relatively stable macro-economic conditions and a favorable investment climate.

It said: "The insurance industry in the country is very small, yet highly crowded and competitive. The key segment driving the overall industry is the non-life segment, which accounted for the largest share of 61.6 per cent of the industrys total written premium in 2012.

"The Nigerian insurance industry is regulated by the National Insurance Commission (NAICOM), which controls the operations performed by all entities including insurance companies, reinsurance companies, insurance brokers, loss adjusters and intermediaries.

"For low income earners, the Nigerian government has concertedly promoted micro insurance; however a poor understanding among consumers of the benefits of such products and inefficient distribution channels is limiting their spread."

The agency said the report provides a comprehensive analysis of the insurance industry, provides historical values for the industry for the reports 2008 to 2012 review period and forecast figures for the 2012 to 2017 forecast period.
"It offers a detailed analysis of the key segments and categories in the Nigerian insurance industry, along with industry forecasts until 2017
"It covers an exhaustive list of parameters, including written premium, incurred loss, loss ratio, commissions and expenses, combined ratio, total assets, total investment income and retentions," it added.
The agency said the report also profiles top insurance companies in Nigeria and outlines the key regulations affecting them.

Miss Insurance 2013, Sadiq Sefiya

Miss Insurance 2013, Sadiq Sefiya

Miss Insurance 2013, Sadiq Sefiya

Miss Insurance 2013, Sadiq Sefiya

Standard Alliance girl now Miss Insurance

Chuks Udo Okonta

Miss Sadiq Sefiya, a staffer of Standard Alliance General Insurance, has won the 2013 Miss Insurance pageant organised by the Chartered Insurance Institute of Nigeria (CIIN).

The pageant which held in Lagos, was keenly contested by 12 beautiful ladies from different underwriting firms.

Miss Cole Oluwayemisi of Anchor Insurance, emerged the First Runner-Up and Ogunkoya Tolulope of AIICO Insurance was the Second Runner-Up.

Miss Sefiya, who was highly excited, said she never gave the contest a thought when it was announced, adding that she made up her mind to participate at the last minutes.

She said her boss and family members encouraged her to participate in the contest.

The insurance Queen went home with the Star Prize is a Kia Picanto Car sponsored by Unity Kapital assurance Plc, while the First Runner-up and Second runner-up took prizes sponsored by Standard Alliance Life and African Alliance Insurance Plc, respectively.

The President CIIN, Dr. Wole Adetimehin, said the pageant is organised to harness the potentials of young ladies in the industry and by extention deepening insurance awareness.

He urged the Queen to live up to the expections reposed on her, adding that the standard set by former queens has to be sustained.

Insurers to face stringent sanctions over currency transaction reports infractions

Chuks Udo Okonta

Insurance firms will henceforth face stringent sanctions over failure to report currency transactions of their customers to the Nigerian Financial Intelligence Unit (NFIU), Inspen has learnt.

Director NFIU Mrs Juliet Ibekaku, disclosed this at the National Insurance Commission (NAICOM) Sensitisation Programme on Anti-Money Laundering and Combat of Financing of Terrorism Control Measures for Insurance Companies in Lagos.

She noted that the NFIU's end of year reports shows that only 3871 Currency Transactions Reports (CTRs) were submitted by insurance companies last year, adding that the Unit would not hesitate to apply stringent sanctions provided in the Money Laundering Prohibition (MLP) Act 2011 as amended in 2012 and the Prevention of Terrorism Act (PTA), 2011 as amended in 2013, if the companies persist in not complying with the laws and regulations.

Ibekaku said failure to file currency transaction reports and suspicious transaction reports is a criminal offence, which the NFIU will enforce working closely with its counterpart in the law enforcement agencies and NAICOM.

She said: "The NFIU would like to reiterate that failure to file CTRs and STRs is a criminal offence which the NFIU will enforce working closely with its counterpart in the law enforcement agencies and NAICOM.

The responsibility to take specific and timely action to prevent the financial system from reputational and legal risks rests mainly with the insurance companies in the first instance because of the nature of the services and products they offer to their customers and because of the type of clientele they serve."

She noted that in the next couple of days the NFIU in collaboration with NAICOM intends to issue further guidance on some of the emerging issues that have been observed.

She said the Anti-Money Laundering law, mandates that financial institutions should report single transactions, lodgement or transfer of funds in excess of N5 million or N1 million by an individual and N10 million or N5 million by a corporate entity to the NFIU.

Deputy Director Inspectorate NAICOM, Emmanuel Farinu, said efforts are being made by the Financial Action Task Force (FATF) to review jurisdictions globally to identify areas that pose risk to international financial system and determining the extent of compliance with anti-money laundering and combating financing of terrorism requirements.

Assistant Director Inspectorate NAICOM Sam Onyeka, said the commission has put in place measures that would enable all the operators to have a harmonised CTRs and STRs reporting system.

From left: Deputy Director Inspectorate National Insurance Commission (NAICOM) Emmanuel Farinu; Director Nigerian Financial Intelligence Unit (NFIU) Mrs Juliet Ibekaku and Assistant Director Inspectorate NAICOM Sam Onyeka at the sensitisation programme on Anti-Money Laundering and Combat of Financing of Terrorism Control measures for Insurance Companies in Lagos.

From left: Deputy Director Inspectorate National Insurance Commission (NAICOM) Emmanuel Farinu; Director Nigerian Financial Intelligence Unit (NFIU) Mrs Juliet Ibekaku and Assistant Director Inspectorate NAICOM Sam Onyeka at the sensitisation programme on Anti-Money Laundering and Combat of Financing of Terrorism Control measures for Insurance Companies in Lagos.

ARIAN blames fake agents for insurance woes

ARIAN blames fake agents for insurance woes

KAYODE ADELOWOKAN

National President, Association of Registered Insurance Agents of Nigeria (ARIAN), Kingsley Obuvie, has ascribed the continual downfall and low level of insurance culture in Nigeria to the presence of unregistered agents employed by insurance companies.

Obuvie, during a media chat with Daily Newswatch in his Lagos office, said that insurance operators are yet to see how agency can help the industry develop and grow to the level of international standards.

He stated that though there are about 34 thousand insurance agents operating in Nigeria, only five thousand are licensed. He explained: “The enormous problem facing insurance in Nigeria is mainly because of the unregistered agents in the market. We have many agents who are not trained but operating in the market selling insurance. If the public can ask for a broker’s licence before any deal is struck, then the public should always ask for an agent’s licence before they do any business with them.

“We have approached National Insurance Commission (NAICOM) on this and it will be in the best interest of the industry if NAICOM can include it in the rule that before any individual or company deal with any person, not minding which company is involved, he or she should ask for the agent’s licence before any talk. The truth of the matter is that the challenges we are having in the industry today is because of these unregistered agents”, he said.

The ARIAN president mentioned that insurance outfits in Nigeria are doing well but they lack manpower, adding that the industry itself has realised that agency is needed to help boost insurance success.

He further said that Nigerians are yet to see agency as a career business and a lot of people don’t want to come into it because it is strictly on commission basis. “Agents are only living on commission earned from the field and the some of the products available are not customer friendly. Looking at the Nigerian economy, an average Nigerians does not see insurance has a priority, if not that motor insurance is made compulsory, there wouldn’t have been anyone buying insurance in the country” he stated.

“Though some companies have actually seen agency as a way to grow their business, they have embraced it and given it some level of support. But insurance companies in the country are yet to see the core value of licensed insurance agents,” the ARIAN president reiterated.

Obuvie also lamented that the industry itself has not given agency the recognition it deserves, yet “brokers are everywhere because the industry has really given them the support which makes it easier for them to gain more ground,” he said.

He therefore called on the industry to embrace the agency and give it necessary support so as to reach out to every Nigerians at all levels.

“If the industry should say let us do business with agency, let us embrace it and see how we can grow the agency business, then, some of the problems we are facing will be a thing of the past and the insurance industry will be a lot better than what we have had before. You can imagine having 49 insurance companies and all of them decide to deal with agency as they are dealing with brokers, I am sure things will be a lot better now,” he advised.

On insurance awareness, he said this is another problem which has impeded the growth of the industry. According to Obuvie, “Insurance awareness is too low in Nigeria, it will be a lot better if the industry can look for a better platform to inform Nigerians at least, compared to what the banks are doing: creating awareness. Before now, how many of us really know about banking; they have to move like a crusade and the awareness was made to be where it is now. The insurance industry in Nigeria needs to wake up and leave the comfort zone of conservative rather create awareness. It is not a thing of one person; it must be a massive movement”.

First Bank intensifies moves for general insurance business

Chuks Udo Okonta

First Bank of Nigeria Plc having successfully established life insurance business with Sanlam Emerging Markets of South Africa, is working hard to float a general business arm, Inspen can authoritatively reveal.

Investigations revealed that the Bank Group will by next month made its position on the establishment of the underwriting firm public.

A source who pleaded not to be named said the group has been putting together necessary requirements for smooth take off of the firm.

He said: "We are still working on it, before the end of next month, we will make a formal announcement. At the moment, we can't say much for we are bound by some level of confidentiality, when we get to that stage we will make a formal announcement."

FBN Life, a joint venture between First Bank of Nigeria Plc and Sanlam Emerging Markets of South Africa, which was licensed to transact life insurance business in Nigeria, officially commenced operations September 1, 2010.

In the joint venture, First Bank of Nigeria Plc., Nigeria’s largest financial institution owns 65 per cent of FBN Life, with Sanlam owns 35 per cent.

Managing Director, First Bank of Nigeria Life Assurance Limited, Val Ojumah, had last year said: "We believe that by the middle of this year we would have acquired a non-life license either by buying an existing non-life company or by getting a fresh license. We are approaching the issue on both hands."

From left: Managing Director Royal Exchange Prudential Life Wale Banmore and Group Head Human Resources Donald Nosiri at meet the Chief Executive Officers (CEO) forum organised by National Association of Insurance Correspondents (NAICO) in Lagos.

From left: Managing Director Royal Exchange Prudential Life Wale Banmore and Group Head Human Resources Donald Nosiri at meet the Chief Executive Officers (CEO) forum organised by National Association of Insurance Correspondents (NAICO) in Lagos.

Royal Exchange picture

From left: Group Exective Director Market and Sale Royal Exchange Auwalu Muktari and Managing Director Royal Exchange General Insurance Company, Olutayo Borokini at meet the Chief Executive Officers (CEO) forum organised by National Association of Insurance Correspondents (NAICO) in Lagos.

Royal Exchange to engage 2000 agents

Chuks Udo Okonta

Royal Exchange Insurance Group is to engage 2000 agents this year to market its products, Inspen has learnt.

Its Group Exective Director Market and Sale, Auwalu Muktari, disclosed this at meet the Chief Executive Officers (CEO) forum organised by National Association of Insurance Correspondents (NAICO) in Lagos.

He said the agents would be deployed to the firm's outlets across the nation, adding that the company has developed a robust Information and Technology (IT) platform to support the activities of the agents.

Managing Director Royal Exchange General Insurance Company, Olutayo Borokini, said most of the products to be sold by the agents have been developed into scratch cards, adding that the firm hopes to sell all its products through scratch cards in small values which would be tailored towards specify needs.

He said: "Those at the grass root can not be reached through the conventional brokers system. They are reached through agency networks which we are developing in house. Also, we are deploying the use of information technology to achieve this.

"We are putting some of these products on our website and sell them through the use of scratch cards through agents. That are the method we have used to reach out to as many people as possible. In fact, the intension is that all our products would sold through scratch cards in small values which would be tailored towards their specify needs.

"The way the scratch card works is that if a young man has just bought a car, and wants to insured it, he would be approached by an agent who would educate him of the need for insurance, if the car owner agrees to insure the car, he would be given a scratch card, with the card, once he pays a certain amount of money, he would be able to access our web site, fill the proposal form on line, he would then get a cover automatically. The process can be done with all smart phones and gadgets.

"An individual can still insure the content of his/her house through the cards, for certain products have been classified for certain prices, for an example, an individual can get a householder policy for one million value.

" At the rate of one per cent, which would cost N10,000 an individual can get a cover which can be done through the scratch card by just buy a card for N10,000 key the pin on it on our customised website, and fill the proposal form and get the cover automatically, after due confirmation. The process assists the insured in the claims collection and ensures that delays are removed."

He said the closure of most companies had had negative effects on the insurance industry, adding that manufacturing is the base of any industrial development. He noted that for any insurance firm to do well, the industries have to do well and that if the industries are doing well, there would be a lot of opportunities for insurance.

"But we have seen that the manufacturing sector is going down, due to lack of basic infrastructure like electricity. Take for an example the textile industry. The industry in the last two years has gone down because of power failure. If every thing is working as expected, the manufacturing and construction which are the real sector and agriculture would generate businesses for insurance," he said.

He said the firm has experienced good fortune since the commencement of the no premium no cover policy, adding that the policy is one of the best things to have happened in the industry in recent times.

Almond productions preaches insurance in pidgin

Chuks Udo Okonta

Almond Productions, owners of Almond Finance and Wealth Report on MITV and Silverbird Television (STV) has announced plans to deepen insurance awareness through a Pidgin English radio programme on Naija FM 102.7, Inspen has learnt.

The thirty minutes programme called Wetin Insurance Dey Do Sef, would be aired live every wednesday by 9:45am.

The phone-in radio programme is expected to discuss various aspects of the insurance industry with thoroughbred professionals who will be explaining insurance to the critical mass of the population in the language they understand.

The Programme producer Faith Ughwode, is to deepen the knowledge of insurance and raise awareness level among the populace about the usefulness of insurance to their lives in the language they can relate with.

Royal Exchange plc, Nigeria's foremost insurance group has thrown its weights behind the programme by sponsoring it for a quarter (Thirteen Weeks)

A statement from the corporate communications of the underwriting firm, said the reason for sponsoring the programme is the advantage such a medium has in reaching the critical mass of the population who listen to radio in their cars, cell phones, laptops, at home, school, shops and offices irrespective of power supply.

PenCom certifies 317 firms for FG contracts

By Sola Alabadan

Senior Correspondent

The National Pension Commission (PenCom) has certified 317 private sector organisations to bid for contracts with Federal Government Ministries, Departments and Agencies (MDAs) as at March 6, 2013, Daily Independent can authoritatively report.

This is by virtue of the certificate of compliance issued to these organisations by PenCom after having provided evidence of complying with provisions of the Pension Reform Act (2004).

Issuance of compliance certificate by PenCom is in line with the provision of Section 16 (6) (d) of the Public Procurement Act, 2007, which states that any supplier, contractor or consultant bidding or soliciting contract or business from any Federal Government MDAs must fulfill all its obligations with respect to pensions.

Compliance with the Pension Act, at minimum, include ensuring that all employees open Retirement Savings Accounts (RSAs) with Pension Fund Administrators of their choice; remitting both employer and employee pension contributions to the appropriate Pension Fund Custodian not later than seven days from the date of payment of salaries; and transferring all pension funds and assets prior to the commencement of the Pension Act to licensed pension operators.

The Compliance Certificate replaces the erstwhile Letters of Compliance that were issued to organisations bidding or soliciting for contracts with Federal Government MDAs.

PenCom had earlier brought it to the attention of all organisations and the general public that by virtue of the provision of Section 16 (6) (d) of the Public Procurement Act, 2007 (PPA 2007), any supplier, contractor or consultant bidding or soliciting contract or business from any Federal Government MDAs must fulfil all its obligations with respect to pensions.

In accordance with the requirement that all organisations wishing to bid for any contract with the Federal Government MDAs must provide evidence of implementation of the Contributory Pension Scheme, PenCom has constantly been updating the list of organisations that have been issued compliance certificates.

The names of the affected companies are pasted on the commission’s website, with PenCom noting that the list has to be publicised to serve as a guide to all Federal Government MDAs and for information of the general public.

The Pension Act establishes a contributory pension scheme for all employees in the public service of the Federation, Federal Capital Territory and the private sector where there are a minimum of five employees.

　

Expert craves autonomy for NAICOM

Chuks Udo Okonta

The National Insurance Commission (NAICOM) should be given reasonable level of autonomy to enable it exercise self executing power over those who breach Insurance Law, the Managing Director Riskguard-Africa Nigeria Limited Yemi Soladoye, has canvassed.

He told Inspen that Insurance Laws in developed nations give the commissioner for insurance an overwhelming power above other regulators in the financial services sector.

He noted that giving the regulator reasonable level of autonomy, would help drive developments in the industry and economy fasters.

Soladoye said presently, due to lack of autonomy, NAICOM has to go through rigorous stages before it can withdraw the license of an erred operator, adding that often times it takes the commission five months before completing the process of revoking the license of an operator.

He said the commission is also hadicap as its decisions can be reversed by the Minister of Finance.

He said: "One of the regulator that has an overwhelming power out of all the financial services, is the commissioner for insurance. You cannot have problem with the Central Bank of Nigeria (CBN) Governor if you don’t borrow money from the bank or do money laundry, but for the commissioner for insurance, you do insurance you can run into his problem and if you don't do insurance you can also run into his problem. Everybody that deals in insurance are under the power of the commissioner as detailed in the insurance Act.

"When you look at other countries law, the insurance regulators have self executing power which enables them to handle any one that may breach any part of the insurance law.

"When our law is reviewed and the regulator has some reasonable level of autonomy, when it has executing power in the country, then we can be there."

Soladoye said the industry's law, principally, is narrow and restrictive in so many areas. He said until the new law is passed, NAICOM has no power to execute most of its mandates.

"Go through the relevant parts of the law, and see the stages the regulator has to go through before it can withdraw the license of an erred operator. It will take NAICOM five months before the process is complete to　 revoke the license of an operator and thereafter the Minister of Finance can still reverse the decision.

"Originally, a regulator in that kind of environment will see that exercise as a career threatening venture," he said.

He said NAICOM is put in the middle with operators sometimes when it tries to resolve issues.

"The regulator in Nigeria is sometime put in the middle and will be asked to state it's side and the operator to also state it own whenever there is need for the regulatory to take action; with that, why do we call such body a regulator," he added.

About 40% Nigerians lack insurance knowledge

 

In spite the efforts being made by the insurance industry regulator, operators and other stakeholders, most Nigerians are yet to come to terms with the working of the business. The Managing Director Riskguard-Africa Nigeria Limited Yemi Soladoye in this interview with National Association of Insurance Correspondents (NAICO) spoke on challenges stemming the industry's growth and steps taken to address them. Chuks Udo Okonta was there.

　

　

How has MDRI fared?

The biggest achievement of Market Developement and Restructuring Initiative (MDRI) is one; the Nigerian insurance industry now have a united focus. We all know, whether you appreciate it or not, key into it or not, it is very clear about where we are going, it is very clear about the milestones we want to achieve, the time we want to achieve it, and the vision, the new mission and the objectives of the industry have also become clear.

Before the MDRI it was the operators that were leading the regulators. Now, unlike before, the operators were even blaming the regulators; at public fora, you will hear operators complaining that if there had been serious regulator in insurance industry, things would not have been like this! You wouldn’t hear that again. Now, the fear of the regulator is the beginning of underwriting wisdom in the business.

The MDRI is like a house, in the sense that even if you have everything ready, that is all the money needed, say you want to build a storey building you have to give it some time for the decking to become solid before you can put the next floor.

Basically, that is what is happening because MDRI is something that remains evergreen any day, it cannot be wished away, by anybody either the operator or the regulator, one thing that we took for granted is the business culture of our operators, we thought that being a new business model that is better than what they had, that they will quickly embrace it, but that was not the case, because I think they are so comfortable with the wholesale market. They are comfortable going to brokers to get N10 million, N50million business.

Even the business of Head of Service it is very possible for an underwriter to get N1 billlion, so they are very comfortable with the wholesale market than the retail market.

The retail market takes some time to mature, it requires　 a lot of expertise in that segment, it requires a lot of infrastructural provision. So, I think their own business concept was not looking at the retail market, it is very possible for an insurance company with four branch offices in the wholesale market to make N10 billion premium, when you are looking at the retail market the bricks and mortal has to be there so they are almost everywhere. Along the line, I think we have seen some measure of improvement, because when MDRI started especially in the area of agency operation the numbers of insurance agent registered with NAICOM was 1,596,　 a year after, we had about 3400 names forwarded by the underwriters as their insurance agents and I know that　 within the different companies at the moment, they are making concerted effort. They have seen that the only way out is the retail market so they are really working on it. Those are the basic things I can say are the achievements of MDRI, but I don’t want to talk about the Naira aspect of it, because I know that will still be achieved, it is just a matter of delay, the time we give that initiative, the capacity in the market going by the insurance gap which is 94 per cent at that time, going by the capital requirement in the Nigeria insurance market which US$33.3 million, looking at the bassel ratio i.e. when you look at one naira of the shareholders fund, how much premium can it support? In the insurance sector we have a situation where N1 of the shareholders fund is capable of supporting N20 of premium income, even by 2007 when we had that capital increased to N5 billion, when we have 94 per cent insurance gap, the market was to operate between N1.5 and N2 trillion, premium income by virtue of the capacity put in place.

So, the N1 trillion premium income is not an ambitious projection. Under normal circumstances, by 2012, we should have really exceed N1 trillion, but I think there were constraints that made that no to happen.

What is responsible for the delay in the full implementation of the MDRI?

The reason why it is taking long is that the infrastructure and mental business re-orientation that ought to have been put in place or that could have come automatically were not there.

In the Nigeria insurance industry before 2007 and up to around this time, I will say that we had about four areas of weaknesses, the first one is access to insurance; it wasn’t there. Almost all the insurance companies in the country, except three have their head offices in Lagos. The branch offices of almost all the insurance companies are in the state capitals. The next biggest town in the state, you would not find any insurance company there.

You will agree with me that, that is not the case with banking. That is not the case with micro insurance, it is so bad that when we were doing the country's study on microinsurance, almost all the insurance companies are in Abuja, but no single insurance office in Keffi which is just 30 minutes drive from Abuja. Access to insurance is a problem. We took it for granted and it has remain a challenge to the industry.

The second weakness is usage; people or oragnisations, understanding the fact or understanding the competing collaborating influence of insurance on other financial services operators. Mortgage cannot develop without a well developed insurance market, because it is only in insurance that you can get funds of long term gestation and once you don’t have that, you don’t have mortgage. We have houses all over Lagos, but nobody is buying them or renting them because the insurance aspect of it is lacking. The mortgage sector has not seen the need or the importance of insurance in its activities, the insurance people instead of seeing the banking sector as collaborators,　 five years and below they were seeing bankers has competitors, whereas we can get a lot from bank assurance which is a collaboration between insurance and banking sector. When I look at the aspect of usage, this may take me to the fact that we have restricted ourselves to the traditional distribution, which is using insurance broker as the sole channel.

Whereas for MDRI, what we packaged is that the regulator should open the channels to non-traditional areas, the cooperative societies; they are a veritable means of distributing microinsurance, Shoprite, Mega plaza, those are places where you could distribute microinsurance. We do have what we call independent network providers, it is possible for those who have stayed close for long to think they has learnt enough about insurance and now he can now run an insurance marketing outreach and they will be licensed a such.

The microfinance banks are there, we do use what we call franchise administrator to run agency, we have restricted ourselves to the traditional distribution channels, it is this that make the usage very low in the market, that is a weakness that we thought will go on its own once the model is right.

The third weakness is the product; we do not have relevant products, in the system, we still operate with the "off the shelve" product. The purpose of MDRI is that the insurance companies will develop products that are relevant and　 problem solving to Nigerians, products that are peculiar to our own risk exposure, I can say that up till now we still have a lot of irrelevant products which was indicated there that tailored made product will be the ideal under MDRI.

The fourth problem is customer services; the customer service in insurance at the moment is poor, up till date customers still have to remind insurance companies that their policy is due, that is a problem. The people that we send out to market individuals across the　 country especially on retails are not well trained, Nigerians even find out that they know more than the people we sent to them. When we look at claim, claim administration comes under two headings: the claim servicing cost and the actual payment of claims itself. I’ll give you an example if your car is involved in an accident, your insurance company may give you a replacement car while your car is been repaired, if your house was destroyed by fire your insurance company will pay for hotel accommodation pending the repair of your property, even as a tenant you will be given rent of alternative accommodation or return to you the rent that you lost in the damaged property and in most countries that cost itself i.e. the claim servicing cost is up to 25 per cent of the insurance net premium income, we don’t do all of those here. It is when you satisfy that, then you have come to the actual cost of the claim which in most countries gets to 60-70 per cent of the net premium income, customers who at the end of the day feels that they are not getting any thing from insurance. In a situation where we are reporting a particular company making a certain billions of naira as net premium, people will feel that look am not needed here, this people are only smiling to bank at my expense, that problem of customer service is there, if there is no good customer service approach there will not be customer trust and confidence, that is equally not there, all these are issues addressed within the MDRI package.

What is NAICOM doing to enforce MDRI?

NAICOM tried within its own understanding of the project that time, let me make a confession to you, even as a consultant sometimes, if you have a project say January 1, and you write out the items you want to treat under the project by December, if you go back to the project you may discover that there is no correlation between the two, events within the system, new understanding, new reading　 will start to shape your write up. I will like to say that I think NAICOM had that problem it was a beautiful blue print, they accepted it and was appreciated internationally, but NAICOM itself do not appreciate the enormity of that package, it was just a total package, it is everything about insurance development and restructuring in this country, yet the objective of a regulator is to create a safe, stable, fair insurance environment, promote growth and competition then protect the customer, but for a regulator to perform these roles three things are very key, the technical expertise of the regulator itself, the level of financial knowledge and inclusion of the regulator, the managerial capability of the regulator, working in NAICOM does not automatically make me a regulator, you have to understand this as the foundation upon which you can change the system in which you are operating, NAICOM has a beautiful package, but lack in terms of man power needed for the project, part of our recommendation is that NAICOM ought to have at least 200 inspectors in their inspectorate department. Once you have those inspectors, you can collaborate with the police and the Federal Road Safety Commission (FRSC). By the time we started this project, NAICOM had three offices all over Nigeria, how is it possible for a regulator with only three offices to know what is happening in Maiduguri or Sokoto? Now, the commission have gone to Ilorin, Port Harcourt and it is like that expanding based on issues in it. For insurance, the cost of its benefit is not about forcing people, by the time there is adequate insurance education, people will 　understand the benefit of it and its enforcement will just come once in blue moon, a way of just going round to know if people are complying. The aspect of insurance education, public enlightenment was also lacking, we tried to enforce it in three places and funny enough people complied, I remembered in Ibadan with FRSC and the Police, we blocked the road going to Ife and the road coming to Lagos and some underwriters heard of it and they came to join us, they started to issue third party motor insurance right on the spot and within one hour, they made about　 N300,000 at N5000 and NAICOM printed handbills showing the logo and the names of 60 underwriters in the market as at that time and people were even thanking us that they now know the right places to go, on all the compulsory insurances people even when we go the hospitals, were thanking us, and asking why they have not been told the benefits a forehand, so almost everybody was interested, but insurance education was lacking.

　

It seems the effect of MDRI is no longer seen in the market, is that the end of the road?

The answer is capital no. I know that NAICOM is repackaging to come back and hit the thing very well to address these problems which I mentioned to you which are actually in blue print. I also know that some insurance companies, that have embraced the initiative. What I did in the past one year, is to go to the sides of the underwriters, the operators and the consumers, with my own personal initiative and money to encouraged people to start doing things right. Because there are three parties involved - the regulator, operator and consumers, there is need to understand their views. Sometime, you hear of things like mortgage endowment all these are products that you can sell through the estate agents and valuers, you can imagine the number of houses under their control.

Some companies are coming up along that line and I know of two that are really coming out big in the area of retail market and that is why I tell you that actualisation of MDRI deliverable is a matter of delay and we are going to get there and I think things have started crystallizing.

With the low performance of MDRI, on what percentage will you place it?

Base on it present status, I will give it 75 per cent at the moment. Though you may be surprise, there are three parties involved in making MDRI work, the regulator, operator and the consultant. Incidentally, two of these stakeholders don't have operating license and MDRI is a business model, no one has ever come out to say it cannot work. The present opportunity and potentials for insurance at the moment is not the same what we had in years past.

In every country, especially in Nigeria, strategies that are implemented are not more than five per cent in total. MDRI is a strategy, in itself the regulator saw it as the way out. It is a nice blue print that regulators has adopted in some other countries. Because it is a business model which you are free to either adopt or discarded, the operators are still interested in it, but it is left to them to implement it, but everything that needs to be done is already on the paper. The MDRI objective will take 75 per cent from me and what is left is to the operators, everything that needs to be done is already in the paper submitted if it will be implemented.

　

As consultant, is it true that Nigerians don't like insurance?

The problem of insurance is 100 per cent from the operators and regulators. According to a report submitted to NAICOM at the end of the visibility study for sales of microinsurance. It will interest you to know that we have been misled for so many years believing that Nigerians don’t like insurance; the report revealed that 40 per cent of Nigerians don’t have any opinion about what insurance is all about, either negative or positive. We were asking them what is insurance, what does an insurer do and others, but they don’t know even at microinsurance level, some of them were saying "maybe if you want to buy a car and your money is not enough then you can go to an insurance company to help balance the money", you can imagine people with such understanding. When we were doing enforcement of compulsory insurance, God is my witness, 100 per cent of people who don’t have insurance were ready to buy insurance right at the spot.

There are some basic problems from the part of operators and the regulator; the problem of access to insurance, usage: the mortgage sector has not seen the usefulness of insurance in their business and such is a serious problem. Low level of awareness is another problem and the irrelevant products in the market is another major problem.

One of the regulator that has an overwhelming power out of all the financial services in Nigeria is the commissioner for insurance. You cannot have problem with the CBN governor if you don’t borrow money from the bank or do money laundry, but for insurance operators; you do insurance you can run into his problem and if you don't do insurance you can also run into his problem. You run an insurance outfit and everybody that deals in insurance are under the power of the commissioner for insurance and other details as contained in the insurance Act. When you look at other countries law, the insurance regulator has self executing power which enables them to handle any one that may breach any part of the insurance law. When you read our own insurance law, it act on another body. The law enforcement agents don't know the importance of the insurance activities as far as motor insurance is concerned. There is no education on the side of the people and until all these are addressed; when the law is reviewed and the regulator have some reasonable level of autonomy, when it have executing power in the country, then we can be there.

Principally, our law is narrow and restrictive in so many areas though it has being reviewed, but until the new one is out, it does not give the regulator any power to execute. Go through the relevant part of the law, the stages the regulator will go through before it can withdraw the license of an erred operator, it will take NAICOM five months before the process is complete to　 revoke the license of an operator and thereafter the Minister of Finance can still reverse the decision. Originally, a regulator in that kind of environment will see that exercise as a career threatening venture.

The regulator in Nigeria is sometime put in the middle and will be asked to state it's side and the operator to also state it own whenever there is need for the regulatory to take action; with that, why do we call such body a regulator.

Is there no need for further consolidation in the industry?

At the moment, the insurance industry is over capitalised and experiencing undertrading. You don't need to go to school to know that anybody doing business with N5 billion and does not make premium income of N5 billion that it is a bad business. That is why I said if you are looking at consolidation within the context of raising the capital again, is absolutely not necessary. Under the MDRI, the introduction of solvency rule which is item four, it has addressed that. The introduction of Risk based capital has also been addressed in the MDRI.

It is because the companies have excess capital that is why many underwriters that run to countries that it population is not even up to Obalende.

Without mincing word, we don't have what is referred to as insurance company in Nigeria, when we talk of insurance company, go and study the annual account of companies like Allais, AIG, State Farm Insurer. They deals in agriculture and their annually generated premium income is $260 billion and when you convert it into naira, it will give approximately N4 trillion and that is why I said we are not there at all. Study revealed, among biggest 16 insurance companies in Africa, no Nigeria insurance company is there and among 500 biggest companies in the world, no Nigeria company is there.

Though things are better now, there was a time we had 184 insurance companies in Nigeria alone, before the 2007 consolidation, we had 103 insurace companies and as at the time I was conducting research on MDRI; packaging the strategy, India with the population of over 1.1 billion people as at that time only had 32 insurance companies, China with 1.3 billion people as at that time only have 52 insurance companies. Those are insurance companies when you talk about size and capacity.

If we really want to talk of consolidation for Nigeria insurance companies, I think companies will have to merge if they really want to become bigger and serve customers better, but their consolidation is absolutely not in terms of capital.

What is the present state of microinsurance product?

There was a meeting with the management of Association Microfinance Banks in Nigeria (AMFB) both at the national and state level in Lagos.

The body were just lamenting; complaining of none readiness of insurance companies to insure their risks, they said they consider it too small.

It is very clear, that insurance companies, which don’t appreciate the risk of you and I which is retail market, will not appreciate the risk of the poor because that is what microfinance banking is all about; most of the loans they give to them is N250,000 loan and when you charge one per cent as premium on it, it will give you N2,500 or N25,000 and insurance companies will consider that too small. To the companies, that will be too insignificant, but what they forget is that it is not the size of a premium that matters, but the volume. This is because insurance principle is based on large number and look at the biggest company in the world, "Wallmark", it picked up small-small companies and those little ones made the company to become the biggest in the world. There is a lot of money in small-small money when it comes from millions of people.

That was the complaint of AMFB and if insurance companies can look into it, there will be away forward.

We also held meeting with National Association of Corporative Society of Nigeria (NACSN), the microfinance people have 20 million depositors at the moment and looking at the amount of premium embedded in that large number, the same also with National Cooperative Insurance Society (NCIS); this union under it law provide insurance cover for it members, but they only provide motor insurance, surprisingly, they mobilise up to N70 million in a year from a single product and it was at the point of that study that we made NAICOM to realised that in the real sense of it, NCIS should not be seen as an illegal insurance operator, rather, it can be used in the aspect of microinsurance and NAICOM has embraced it instantly.

How will you as a consultant describe the idea of offshore insurance offices?

I do not see it as an ideal development because we have not even utilize the insuring opportunities available in the country and most of those that have offices outside the country have nothing in there and there are better opportunities here in Nigeria. As part of function of MDRI, it could also be handled by the regulator. Countries like India or China; the regulator will not prevent you from opening offshore branch, but it will mandate it that at any offshore branch you may want to open, you must open five of it at the local level.

In some countries, before they give license to open a branch in the urban centre, they will give you a target of number of branches you must open in the rural areas. If the regulator here can do likewise there will not be any problem.

　

CIIN holds miss insurance dance

 

Chuks Udo Okonta

Insurance practitioners are warming up for another opportunity to select the Industry Queen, Inspen has learnt.

A statement by Director/Head Corporate Affairs Joseph Obah, said the event known as Miss Insurance Dance, has continued to provide the platform for women empowerment in the Insurance sector through social engineering.
He noted that the contestants, who are usually young single ladies, are emboldened by the courage to participate in the pageant while also developing the spirit of sportsmanship and tolerance engendered by the keen contest.
He said this year's edition of the Dance will take place at the K & G Events Centre along Kudirat Abiola Way, Oregun in Lagos, on Friday March 15. With the star prize of a Kia Picanto car and the glamour of a one year reign, he said the contest has in the last four years attracted higher quality contestants.
The out-going Queen, Miss Onyeka Adigwe who is an employee of Goldlink Insurance Plc, said it had been a rewarding experience and an opportunity to flag the industry banner as its ambassador for a period of one year. Miss Adigwe said the experience had made her bolder and more matured, stating that it had brought out the best in her in terms of skill and talent. Adigwe’s pet project, anchored on Youth Empowerment and Insurance Awareness among secondary school students, had also pulled her out of her former comfort zone and made her a motivational speaker.
Obah said the 2013 edition of the pageant promises a lot of excitement, especially with the innovative ideas injected into it by the organizers. He noted that there would be red-carpet reception for dignitaries and well dressed attendees, music from a new wave Disc Jockey and other side attractions.
He said the Star Prize is a Kia Picanto Car and has been sponsored by Unity Kapital assurance Plc while prizes for the First Runner-up and Second runner-up have been sponsored by Standard Alliance Life and African Alliance Insurance Plc, respectively.
Obah noted that no fewer than 12 beautiful ladies have so far enlisted in the contest, all of them with high hopes.
"Like many other pageants, the Miss Insurance Dance considers both beauty and brains in throwing up the eventual winner.
"However, unlike most modern pageants, the Dance does not accommodate skimpy dressing. Contestants usually have four appearances; in their office wear, the sportswear, the traditional dress and the evening wear, respectively. Music and dance constitute a major attraction during the event and this year’s edition is no exception as the renowned DJ Humility will be on hand," he said.
Chairman of the Institute’s Activities Committee, Sakiru Oyefeso who is also the Managing Director of STACO Insurance Plc, said the Miss Insurance Dance has never witnessed any violence or protests. He gave the credit for this uniqueness to the background of insurance men and women as honourable people.
He noted that the Activities Committee of the Institute was always painstaking in providing adequate security and the choice of its Judges. Oyefeso challenged other pageant organisers to borrow a leaf from the CIIN.
CIIN’s Director-General Adegboyega Adepegba, said the Institute’s secretariat team was committed to ensuring a hitch-free event.
Adepegba said all had been put in place to make the Dance a memorable one.