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.