The Commissioner For Insurance, Mr Sunday Thomas, says recent efforts by NAICOM to review status of claims in the books of insurance companies and findings during onsite examination,  reveals  worrisome number of outstanding claims.

The commissioner also charged  Boards of insurance companies to support measures put in place by the regulator to tackle  challenges of unpaid claims.

Thomas, also the Chief Executive  Officer, National Insurance Commission (NAICOM) said this at the 2023 Insurance Directors’ Conference organised by the College of Insurance and Financial Management (CIFM) in Lagos.

The theme of the conference is: “The Board and Insurance Business Sustainability”.

According to him, the commission working with members of the Insurers’ Committee, have taken decisions and incepted measures designed to tame the menace of unpaid claims.

“We call on members of the boards of insurance institutions to support these measures by putting in place policies designed to tackle the menace.

“The commission will not hesitate to consider other regulatory measures to address the menace, ” he said.

Thomas highlighted some of the high-level issues observed by the commission during its just concluded  fourth batch of the onsite examination of some insurance institutions, using the risk-based supervision methodology.

The commissioner stated that NAICOM observed that some insurance firms embarked on inadequate policies and procedural manuals, and in some cases, non adherence to these policies where they existed.

He said some of the policies were not reflective of the specific requirements of extant regulations such as the Prudential Guidelines and Market Conduct Guidelines, among others.

According to him, there is need for directors to improve their understanding of the requirements of AML/CFT particularly, the recently introduced requirements regarding proliferation financing in the AML/CFT/CPF regulations 2022.

“Also, inadequate risk profiling methodologies and practices, absence of policies to protect Chief Compliance Officers and Chief Risk Officers from intimidation and victimisation.

” Inadequate board compliance policies resulting in companies breaching extant laws and regulations with no consequential action by the board.

“Inadequate focus of boards on risks inherent in the core or significant activities insurance companies such as underwriting, reinsurance, claims, investment and information technology, among others.

“Under-trading as the ratio of capital to premium of most companies are below standard threshold.”

According to the commissioner, these issues require urgent attention of the boards by way of adequate policies to ensure proper guidance in order to ensure sustainability of insurance institutions.

Thomas noted that companies did  not just die, people killed companies; as most of the issues that led to the collapse of companies resulted from governance challenges.

He said that NAICOM recently had to penalise some companies that had utilised unlicensed intermediaries in blatant breach of the Insurance Act 2003.

The commissioner stated that in recognition of the increasingly complex business environment, the commission had resolved to facilitate innovation and sustainability of the industry.

Thomas hinted that NAICOM had heightened its supervision and now focused on resolving broader policy challenges such as sustainability, climate risk and digitalisation, among others.

He said this would be done through regulatory policy initiatives that could facilitate the offer of essential range and variety of products and services that supported the Sustainable Developmental Goals (SDGs).

In a presentation, Dr Lucy Newman, CEO, Africa Private Sector Summit suggested that the board of insurance institutions should focus on efficiency, diversify revenue streams and invest in innovation.

Newman charged the insurance companies board to also engage with stakeholders, embrace sustainability and corporate culture, among other options to sustain their businesses.

Dr Elias Omondi, Principal Innovation for Resilience, FSD Africa, stated that there was need for sound insurance supervision to protect policyholders and insurance companies from going broke and paying fair claims.

Omondi charged managers and directors of insurance firms to adhere to processes of checks and balances, in line with corporate governance and Risk Based Supervision (RBS).

Dr Nosike Agoke, Member, Society for Corporate Governance Nigeria, advised that a third party independent body should be instituted to do the evaluation of the board of companies.

Agoke charged the board of directors to be more responsible in the discharge of their duties by effectively scrutinising agenda items brought before it for the first time before approving.

“It is unfortunate that the engagement the board has with its owners and stakeholders is minimal and tends to be reactive and defensive,” he said.

In her closing remarks, Mrs Yetunde Ilori, Chairman, CIFM thanked NAICOM for its support to organise an insightful conference for the directors and lauded the presenters for being exceptional in their deliveries.

Ilori also commended Mr Edwin Igbiti, President,  Chartered Insurance Institute of Nigeria (CIIN) for allowing the college to enjoy a level of independence and micro manage itself.

The News Agency of Nigeria (NAN) reports that no fewer than 150 board of directors of insurance companies and broking firms in the country attended the conference. 

By Matthew Denis

The Chairman of Heirs Holding Group and United Bank of Africa (UBA), Chief Tony Elumelu has proposed an increment for the capital base of Life Insurance companies to N20billion and that of Non Life Insurance to N30billion.

He made the disclosure during his keynote address at the opening session of the National Insurance Conference held in Abuja.

Delivering his speech, Elumelu said, “I propose we should increase the capital base of insurance companies to N20billion for life and N30billion for Non Life.

“We review the dichotomy in insurance authorisation, licences between the Life and Non Life while consolidated operators should have N50billion and let us use regulation to shape behavior and enforce compliance.

Elumelu tasked the National Insurance Commission (NAICOM) to focus on substance and things that shape the sector. He urged the regulator to focus on more important aspects of regulations and save taxpayers money for more catalytic action.

He advised all insurers to mandatorily contribute 0.5 percent of their revenue to drive industry awareness for five years which the Nigerian Insurance Association should administer professionally.

“Insurance broker capital base should be increased to N1billion and the regulator should allow the brilliant minds to come into the insurance sector thereby limiting years of experience to technical areas,” he said.

According to Elumelu, “With the right foresight and enabling environment, we shall see the transformation of the insurance sector in Nigeria. Let us emphasise that the regulator and the government have a critical role to play in ensuring that insurance becomes the right of every citizen in the country.

“In a society where the people are not insured they are exposed to financial uncertainties which do not only affect them but entire families and communities.”

Elumelu urged all hands to be on deck to reassure and eliminate the stifling policies, roadblocks and complacency in the insurance system by encouraging innovation and simple accessibility not as an option but a fundamental right to secure the future.