Chuks Udo Okonta
The outgoing Commissioner for Insurance Fola Daniel, will at
the close of work today, hand over the mantle of regulating the insurance
industry to the Deputy Commissioner Technical Mohammed Kari, Inspen has learnt.
 |
| Kari |
A source in the National Insurance Commission (NAICOM) told
Inspen that the outgoing Commissioner will hand over to the most senior of the
Deputies, who will hold forth pending the appointment of his replacement by
President Muhammadu Buhari.
Fola Daniel was appointed the
Commissioner for Insurance/Chief Executive of the National Insurance Commission
(NAICOM) on August 1, 2007, at the peak of the crisis that engulfed the
Nigerian Insurance Industry following a Ministerial Panel’s indictment and
subsequent sack of his predecessor for the improper management of the
Commission and the insurance industry recapitalization exercise.
His appointment came at a time when the
National Insurance Commission was at its lowest ebb. The technical capacity was abysmally below
internationally accepted regulatory indices with core technical staff capacity of
less than 20 to a proportion of 153 poorly trained auxiliary staff coupled with
low staff morale owing to poor working condition/environment and poor
remuneration. The internal schism
amongst Management and Staff of the Commission culminated in the setting up of
a Presidential Panel to review the Recapitalization Exercise and Management of
the Commission.
Several litigations were also instituted
against the Commission by major trade arms of the Insurance Industry. Some of the suits included the NIA
Recapitalization Suit and the NCRIB Suit to name a few.
These problems, amongst others, rendered
the Commission virtually incapable of discharging its regulatory oversight and
thereby created regulatory vacuum, pervasive poor corporate governance and
management challenges in the insurance institutions and a drop in the
Industry’s contribution to the Nation’s GDP.
The insurance industry was in a stalemate!
MAJOR ACHIEVEMENTS OF THE ADMINISTRATION
OF MR. FOLA DANIEL:
Mr. Fola Daniel was saddled with the
unenviable responsibility of reforming the National Insurance Commission, the
entire Insurance Industry as well as steer the industry out of the crisis. He has successfully executed these tasks to
the admiration of all the stakeholders.
The following highlights of major achievements of the current
administration of NAICOM will substantiate the above assessment:
1. Conclusion of the Recapitalization of
the Insurance Industry:
Within two months of his appointment as
the Commissioner for Insurance, the stalemated recapitalization and
consolidation exercise in the Insurance sector was brought to a successful
conclusion in September 2007 resulting in the consolidation of 107 Insurers to
51. Released the recapitalization funds
held in the escrow account and appointed Liquidators to administer the process
of winding-up insurance companies that could not meet the minimum capital
requirements.
It is worthy to stress that his
principled management of the process undoubtedly tamed what could have resulted
in serious embarrassment to the Federal Government given government’s part
ownership of some of the companies that had some deficiency.
2. Resolution of Disputes with Trade Arms
of the Industry:
Prior to Mr. Fola Daniel’s appointment,
the Nigeria Insurers’ Association (NIA) and the Nigerian Council of Registered
Insurance Brokers (NCRIB) had in different suits sought the intervention of the
Court on several regulatory directives and actions. These suits were capable of undermining the
very essence of the Commission if not managed.
Following dialogue between the current administration with the NIA and
NCRIB, the legal challenges by the two trade associations were dropped, paving
way for out-of-court settlement.
A major dividend of the dispute
resolution with the NIA is the unconditional waiver of its claim to a return of
about N1.5billion earlier collected from Insurers. This money hitherto kept in a holding account
pending court resolution became available to purchase a Head Office edifice for
NAICOM.
3. Project e-Regulation
The current administration’s quest to
align with international best practice, led to the initiative to migrate from
current manual supervision to IT-driven supervision. The project tagged
‘Project e-regulation’ when fully operational will allow seamless
inter-connectivity between the Commission and the Insurance Sector thereby
ensuring “real-time-direct data capture” and timely solvency monitoring.
This project became the first NAICOM
project to secure the positive endorsement of the World Bank through the
Economic Reforms and Governance Project (ERGP).
The project is nearing completion with the conclusion.
4. Restructuring of the Commission:
It would be recalled that the Panel of
Investigation on the Management of the Commission also found that out of the
153 NAICOM workforce, less than 20 constitute the core technical staff. It therefore found NAICOM lacking in
Technical/Professional manpower required to discharge its statutory functions.
In furtherance to the recommendations of
the Panel, the Commission has been restructured by the current administration
for operational effectiveness in line with the recommendations of the
Presidential Panel on the Commission’s Management. It also conducted manpower audit to identify
appropriate manpower requirements and carried out a deselection exercise. The recruitment of successful candidates was
subsequently conducted to fill identified gaps.
The successful implementation of this exercise has resulted in
far-reaching improvement of the manpower profile of the Commission.
5. Capacity Building:
In furtherance of the administration’s
resolve to transit from compliance-based supervision to risk-based
supervision/capital in line with international best practices, all the Staff of
the Commission were made to undergo relevant training in order to equip them
with the requisite know-how to effectively discharge their duties. All these have placed the staff of the
Commission in a better pedestal to effectively discharge their statutory
duties.
6. Review of Staff Remuneration:
In line with Mr Daniel’s Vision of
enthroning a motivated workforce and current market realities, FITC Consulting
was engaged to conduct personnel emolument survey to incept appropriate
compensation/reward system. The Survey
covered compensation rates of other Financial Services Sector Regulatory Agencies in Nigeria like,
SEC, NDIC, PENCOM
and CBN and
a few Insurance Companies.
The Consultant completed the assignment
and submitted its Report. In recognition
of the fact that issues of salaries, incomes and wages determination and
administration in the Nigerian Public Service fall within the ambit of the
National Salaries & Wages Commission, a memo was forwarded through the
Federal Ministry of Finance to the Salaries & Wages Commission for its
approval. Following approval of the
National Income, Salaries & Wages Commission, the reviewed NAICOM Staff
remuneration package was implemented with effect from 1st May, 2009.
This implementation of the package
resulted in an upward review of NAICOM’s staff remuneration and has positioned
the Commission as one of the preferred employer of labour among regulatory
authorities in the Financial Services Sector.
Following the Federal Government’s
increase in the salaries of civil servant, the management under Mr. Daniel
keyed into the exercise and also reviewed the salaries of staff of the
Commission.
7. Market Development & Restructuring
Initiative:
Market development is one of the
important functions of the Commission.
In order to ensure effective discharge of this statutory responsibility,
the current administration of Commission, in its quest to deepen insurance
penetration, launched a market development initiative titled “Market
Development and Restructuring Initiative” (MDRI). The objectives of the MDRI are as follow:
(i) Build confidence in the Nigeria
Insurance Market
(ii) Promote public understanding of
Insurance mechanism
(iii) Grow the Nations Insurance premium
volume and density
(iv)Eliminate fake insurance
certificates.
The programme is aimed at enforcing
compulsory insurances in the country, wiping out of fake insurance
agents/certificates, reformation of the agency system and risk-based
supervision. The implementation of the
MDRI which has commenced has also increased awareness and enhanced access to
affordable Insurance products, reduce insurance gap and boost the Insurance
Industry’s contribution to the Nation’s GDP.
This programme also received the positive
endorsement of both the FSS 2020 Secretariat and the World Bank. They have also pledged their support for the
successful implementation of the initiatives.
8. Improved Regulatory Oversight:
In its resolve to ensure effective
discharge of its regulatory oversight, the current administration strengthened
its core operational departments such as the Inspectorate and Supervision
directorates. This has better
reposition the Commission and enabled it to effectively supervise a
reinvigorated insurance industry. The
Commission under Daniel’s leadership
also released several Guidelines, notable among which are the following:
(i) Market Conduct Guidelines –
a. Claims Management,
b. Fair Treatment of Customers,
c. Operational Regulations,
d. Premium Collection and Remittance (No
Premium No Cover)
e. Commissions, returns and refund
premium
f. Registration and Authorization
requirements for intermediaries,
g. Regulatory and Accounting Requirements
for Intermediaries, etc
(ii) Prudential Guidelines –
a.
Accounting, Returns and Investment,
b.
Claims Reserving,
c.
Reinsurance,
d.
Protection of Policy Holders Fund,
e.
Developing a Risk Management Framework for Insurers and Reinsurers in
Nigeria,
f.
IFRS Harmonization Carve-Outs and Regulatory Requirement
g.
Divestment Guidelines,
h.
Audit
i.
Outsourcing Guidelines
j.
Etc
(iii) Guidelines on Annuity Business.
(iv) Financial Inclusion Guidelines:
a. Guidelines for Microinsurance.
b. Guidelines for Takaful Insurance
Operation in Nigeria.
(v) Combating Financial Crime Guidelines:
a. Know Your Customer Guidelines (KYCG).
b. Revised AML/CFT Guidelines
(vi) Special Category:
a. Guidelines for Oil & Gas Insurance
Business.
b. Code of Corporate Governance for
Insurance Institutions – May be included in Prudential Guidelines
(vii) Several Circulars and Letters, etc.
9. The New Financial Reporting Format and
Accounting Practice:
The present
administration also carried out a major restructuring of the Financial
Reporting Format and Accounting Practices in the Insurance Industry resulting
in the consequent release of Revised Guidelines in 20I0 in conformity with NASB
and IFRS standards. The new guideline
imposed a more stringent requirement on the Insurance Industry which requires
adjustments by both Operators and their External Auditors.
The above
initiative has resulted in better transparency and disclosure in the insurance
industry as have been attested to by relevant stakeholders.
10. Code of Corporate Governance for the
Insurance:
As at May
2008, the Insurance sub-sector was the only sub-sector within the Financial
Services Sector without a Code of Corporate Governance. It was therefore imperative to have a sound
code of good corporate governance that sets out the operational and procedural
guidelines for insurance/reinsurance companies to strengthen internal control
and reduce instances of insider abuse.
The administration of Daniel
again rose to the occasion and incepted requisite mechanism which culminated in
the release of the Code in 2008.
As a follow up to the release of the Code, the
Leadership of the Commission commenced well thought out programmes to enlighten
all Members of the Board of Directors of all the Insurance Companies. These seminars have received positive endorsement
of Members of the Board of Directors of Insurance Institutions who have praised
the Commission for educating them on their roles/responsibilities as enshrined
in the Code.
11. IFRS Transition:
The
Commission under the leadership of the Daniel became one of the first financial
services regulatory authority to transit harmoniously from NGAAP to IFRS..
This
achievement coupled with improved financial analysis of Annual Returns and
Accounts emanating from improve capacity, has enthrone better transparency and
disclosures in the financials of Insurance Institutions in Nigeria.
For the
first time, Accounts approved by the Commission is now well regarded and even
recognize as evidence of good financial standing of the insurance company.
12. Review of the Enabling Acts:
As part of
ongoing reforms in the Financial Services Sector, the Federal Government of
Nigeria on Tuesday, March 10, 2009 a Committee was constituted to review the
Insurance Act and Regulations 2003, and the National Insurance Commission’s Act
1997.
In
furtherance of the above, the Committee conducted the following:
(i) Critical Review of Existing Laws on
Insurance.
(ii) Comparative Review of Laws Governing
Insurance and Other Financial Institutions.
(iii) Examined the Comparative Status of the
Insurance Industry in relation to other sectors.
(iv) Country Comparative Analysis, International
Best Practices in Insurance Laws & Regulations.
The
Committee completed the assignment and submitted the Draft Bill to the Federal
Ministry of Finance for onward presentation to the National Assembly through
the Ministry of Justice.
13. Strengthen Insurance
Institutions – Mr. Fola Daniel’s administration has ensured the following:
i) The maintenance of adequate level of
capital
ii) Implementation of the Risk Management
Framework for insurance Institution
iii) Continued compliance with IFRS by Insurance
Institutions to sustain the integrity of financial reports.
iv) Compliance
with all relevant laws and regulations –
v) Implementation of the “No premium no cover
policy” has led to improved liquidity for insurance companies to pay claims
promptly.
14. Enhance NAICOM's Regulatory Capacity and
Oversight –
i) Manpower development and effective
Performance Management System.
ii) Appropriate deployment of Information and
Communication Technology infrastructure for effective discharge of the
Commission’s oversight functions.
iii) Intensive Inspection of Insurance Companies
according to their risk profile.
iv) Work towards the passing of the Insurance
Bill into Law –
15.
Effective Management of Stakeholders’ Expectations and Strengthened the
Complaint Redress Mechanism:
In
furtherance of this Mr Daniel’s Administration’s commitment to ensuring that
Insurance Operators fulfil their promise of indemnifying insureds, the
Commission’s Complaint Bureau was restructured and strengthened through the
provision of required staff and working tools.
This has expedited the complaints resolution processes and enabled the
Commission to effective monitor Insurance Companies’ claims settlement
processes excluding NICON Insurance Plc where a lot of complaints relating to
Pension Matters are yet to be resolved.
In other to
sustain this, we:
i) Conduct regular interaction &
stakeholder panels to exchange views.
ii) Complaint procedures and market conduct to
ensure that insurance policyholders are treated fairly and they have avenues to
seek redress.
iii) Support Management’s efforts to strengthen
the Complaint Bureau’s buoyed by the establishment of a Call Contact Centre for
easy accessibility & prompt complaints redress management by adopting zero
tolerance for non-settlement of genuine claims or delaying claims settlement.
Several
complaints valued at about N4.2billion was adjudicated and resolved between
2007 and April 2015. This development
has increase insurance consumer’s confidence in the Commission and the
insurance industry.
16. Review of Insurance Brokers
Registration/Renewal Processes:
The current
administration also conducted a review of the requirements for registration of
intending Brokers and the renewal processes.
The purpose of the review is to encourage emergence of mega insurance
broking firms as well as reduce the prevalence of fringe players. The review
culminated in the revised renewal and registration requirements effective
January 01, 2010. The review has made
the process more efficient thereby reducing the renewal turnaround time.
17. Corporate Head Office:
As part of
his vision to provide conducive working environment for staff and ensure
improved productivity, the current administration successfully sought and
secured Mr. President’s approval of waiver to enable NAICOM purchase an office
complex. Consequently, in accordance
with due process, Management acquired a building at Plot 1239, Samuel Akintola
Boulevard, Garki II, Abuja which is the current Headquarter of the Commission.
18. Highest Growth Rate in the History of the
Insurance Industry:
The
Insurance Industry’s growth rate for the Year 2004 – 2007 stood at
approximately 11%. The same industry
experienced a growth rate of 35% for the Year 2007 – 2010 which is the highest
growth rate ever experienced by the Insurance Industry. The above clearly demonstrates the positive
influence of the current Administration’s reform programmes and initiatives.
