200 brokers flout no premium no cover rules

Chuks Udo Okonta

About 200 insurance brokers have been found by the National Insurance Commission (NAICOM) to have violated the No Premium No cover policy, Inspen has learnt.

In the new premium collection and remittance rule, which took effect from January 1, this year, brokers were urged to within 48 hours of receiving premiums on behalf of any insurer; notify the insurer in writing in each case, of the receipt of such premium. NAICOM noted that all such notification shall be accompanied by the broker's credit notes, acknowledging indebtedness to the insurer.

The commission maintained that 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.

The President Nigerian Council of Registered Insurance Brokers (NCRIB) Laide Osijo, who disclosed this at the maiden edition of the Investment Platform for Insurance Brokers and Farewell Luncheon for her, organised by the Lagos Area Committee of the NCRIB in Lagos, said the Commissioner for Insurance Fola Daniel, spoke about the breach at the Professional Forum, organised by the Chartered Insurance Institute of Nigeria (CIIN) in Ibadan Oyo State.

She noted that NAICOM had threatened to sanction the erring brokers, but for her appeal, NAICOM had agreed to issue them a warning letter to serve as deterrent to others.

Osijo then called on brokers to comply fully with the directive, adding that it remains one of the best things to have happened in the industry.

She said: “I would like to express again the need for brokers to comply with the No Premium No Cover directive. You will recall that in view of the need to enhance the understanding of our members about the directive, I have advised that enlightenment seminars be held at all the area committee of our council by NAICOM nationwide.

“However, it was revealed to my amasement, personally by the Commissioner for Insurance and reiterated at the CIIN forum in Ibadan that about 200 brokers have been found to violate the directive, for which the commission was poised to give sanctions.

 “On the strength of the robust relationship I have with the commission, I strongly interceded for a waiver of the intended sanctions, pleading ignorance on the part of the members and that such infringement would not occur anymore. Whilst agreeing to the plea, NAICOM insisted that a warning letter would be written to the erring companies, but with a waiver of the intended sanction. This situation has necessitated my appeal again to members to comply with the no premium no cover directive, which to all intents will take our council to higher heights.

 “We must come to terms with the fact that No Premium No Cover has come to stay. There is definitely no industry where goods and services are bought on credit, as it is the insurance industry. We must be united in putting an end to this anti-insurance attitude of clients for our long term benefits.”   

NAICOM warned that any underwriter that provides insurance cover without collecting the premium would be liable to a penalty of N500, 000 or lose its license.

The Commission noted that all insurance covers shall only be provided on a strict 'No Premium No Cover' basis. It maintained that only cover for which payment has been received, directly by the insurer or indirectly through a duly licensed insurance broker, shall be recognised as income in the books of the insurer.

NAICOM 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 the license of the insurer.

It 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.