Now that NAICOM bites

Chuks Udo Okonta

Time was when the National Insurance Commission (NAICOM) was reproved for its inability to sanction erring operators, but since the Fola Daniel led administration rose to the challenge of not tolerating nonsense, operators seen to be crying to high heavens.

In spite the cry of highhandedness by some operators, the commissioner has vowed to stay with the rule and ensure that normalcy returns to the industry. He maintained that his primary assignment as a regulator is to protect the interest of policyholders and investors who look up to him.  

He said: “I want to confirm to you that, from time to time, we sanction insurance operators and if it is important for the public to know we let them know. Our sanctions are largely remedial. What is upper most in sanctioning an insurance company is the protection of policy holders. If I sanction an insurance company and put it on the papers of newspaper, without obtaining a remedy, how does that help the policy holder? But if I can effectively sanction an operator and the interest of policy holders is fully served, that means we are doing the right thing.”

Underwriters have cried out over what they termed over regulation and the haphazard manner at which queries and sanctions are issued on trivial matters.

The Chairman Risk Management and Compliance Committee of the Nigerian Insurers Association (NIA) Aduloju George, said in a report submitted to the association, that regulators often threaten underwriters with closure of their premises and court actions, adding that underwriters are also pressured in meeting the requirements of the Securities and Exchange Commission (SEC), coupled with the delayed approval of their financial statements by NAICOM.

“The haphazard manner at which regulators are issuing queries and slamming various sanctions on member companies, even on trivial issues is also a great concern,” he said.

 Brokers recently cried to NAICOM to administer maximum of two warnings before penalising a broker.   

President Nigerian Council of Registered Insurance Brokers (NCRIB), Ayodapo Shoderu, said: “Whilst commending the Commission for ensuring strict compliance of insurance brokers with high ethical and regulatory standards in the insurance industry, I used the medium to passionately appeal to NAICOM to always give warnings to erring members before severe penalty is brought to bear on them.

“We strongly advocated that such companies could be given maximum of two warnings before being penalized. Similarly, we appeal for a review of the regime of fines imposed on Brokers, considering that at least 80 per cent of them are small in sizes and heavy penalty may drive them completely into extinction, a situation that may be counter-productive to the growth efforts of the industry pioneered by NAICOM.”

Observers believe adhering to the cry by operators, may erode the confidence that is gradually returning to the industry.

They commended NAICOM for facilitating the settlement of N2.2 billion claims and its position in ensuring that only credible financial accounts are approved as seen last year.

The observers lauded the commission’s efforts in taking over some problem firms, which they said has helped secured the stake of policyholders and investors.