International Rating Agencies Score Industry Weak

The Guardian 

OPERATORS of the nation's insurance industry may need to design strategies this year that will create value and drive growth in the industry, if they are to survive regulatory sanctions. A report from international organizations and rating agencies have continued to rate the Nigerian insurance industry as being weak. The organizations include International Association iof Insurance Supervisors (IAIS), the Financial Stability Board (FSB), the International Monetary Fund (IMF), KPMG and Standard & Poors.The National ±Insurance Commission (NAICOM), in a report said that the last demonstration of under-regulation in the insurance industry was posted by Standard & Poors (S&Ps) rating on Nigeria's property-casualty insurance sector which indicated a high industry and country risk assessment. The report rated Nigeria's institutional framework in insurance based on their assessment of two factors - regulatory framework and track record, governance and transparency as weak. According to NAICOM, the assessment has taken several forms and different programs, one of which is the Financial Sector Assessment Programs (FSAPs) conducted by the International Monetary Fund (IMF) and World Bank.

Specifically, the Commissioner for Insurance, Fola Daniel, who confirmed the rating reports lamented that from the audited financials of nearly a dozen insurance companies, solvency gaps are recurring features of their activities for as much as three consecutive years.

Industry sources expressed worry that as at 31st December, 2014, about eight insurance companies have not submitted their 2013 audited accounts to the commission while about 12 insurance companies failed to get approval for their audited financial reports.

According to the Insurance Act 2003, provides for submission of annual accounts not later than 30th June, the requirement b y the Nigerian Stock Exchange (NSE) for listed companies is 31st March.

The Guardian gathered that a number of insurance companies may still be experiencing challenges in the understanding of the International Financial Reporting Standards (IFRS).

Besides, the growth of the industry has remained constrained bhy the near total absence of risk management practice and appropriate product pricing amongst other issues plaguing the industry. The consequence is massive loss of premium and wealth to stakeholders.