All Eyes on New Commissioner for Insurance
As the new Commissioner for Insurance, Alhaji Mohammed Kari rolls his sleeves to commence his official assignment, industry operators and other stakeholders have listed their enormous expectations from him. Ebere Nwoji reports
The regime of Mohammed Kari as Commissioner for Insurance is characterised by high expectations from insurance industry operators and other stakeholders. Given his wealth of experience, expectations from him are enormous, especially in the present journey of the Nigerian insurance industry to match global competition and contribute significantly to the national economic growth.
The operators said though the immediate past commissioner Mr. Fola Daniel had through his various reforms in the industry recorded remarkable achievements, which have helped to reposition the insurance sector, these achievements will at best serve as building blocks for the new commissioner to take the industry to a global height and improve its contribution to the national economy.
The Insurance industry ranks second in Africa in terms of market size and its contribution to the economy is currently below one per cent.
Against this back drop, industry stakeholders want the new commissioner to consolidate on reforms that will deepen insurance penetration, instill more discipline on operators in order to build higher public confidence on the industry.
Managing Director, Nigerian Agricultural Insurance Corporation, (NAIC) Mr. Bode Opadokun suggested that the new commissioner pays attention to good corporate governance as well as full implementation of all compulsory insurances with a view to achieve increased premium income for the industry.
Currently, the premium income of the industry is N360 billion, well below N1 trillion mark projected by the immediate past commissioner who has virtually put everything on ground to aid the achievement of the N1 trillion mark by 2017.
Also, implementation of six compulsory insurances slated by the former commissioner five years ago, was targeted at improving on premium income generation for the industry but despite the public campaigns and road shows staged by the industry in six geopolitical zones of the country, the enforcement in practical reality has not been achieved, a situation, which has scuttled the effort to transform the industry to a trillion Naira market.
Insurers had at the Flagg off campaign on compulsory insurance projected that implementation of compulsory builders insurance alone would annually yield N10 billion premium to the industry. Their expectation in this regard became higher when shortly after that , state governments started enacting their building insurance acts but till date, nothing much has been done in this regard in terms of implementation, just as cases of building collapses abound in different parts of the country. Against this backdrop, the insurers are looking at Kari as the messiah that will actualise enforcement of the compulsory insurances and they expect the new commissioner to act fast.
At the recent mega conference of the industry held in Abuja, industry operators in their various breakup sessions set agenda on what needs to be done to take the industry to a greater height.
The insurers are optimistic that if the new commissioner gives consideration to these agenda , it will aid the growth of the industry.
The session on Growth Option for the industry among other things suggested that there is need to create financial intervention agencies for the industry for the purpose of financing premium so that if the insured cannot pay premium at once, they can run to the agencies for assistance in order to have financial security. This, they said will ensure higher patronage for the industry in the face of ‘no premium no cover’ regulation, which has obviously dissuaded many people from buying insurance.
The group also suggested that to facilitate distribution of simple insurance products, there is need to put in place regulation that will guide the sale of insurance products even in supermarkets and other retail shops so that Nigerians can walk into supermarket or similar intermediated arrangement to buy their insurance policies.
The session on regulation recommended that the industry should align with Nigerian police and other allied forces and agencies including Road safety commission and fire service for prosecuting defaulters of motor insurance and similar policies. Certainly, the insurers are looking upon NAICOM in this regard as government agency to link them with the agencies, which are sister government agencies to the commission.
The insurers recommended that NAICOM should collaborate with their leaders to build very strong relationship with these agencies ,visit their leadership bodies as a way of collaborating with them in enforcement of compulsory insurances. They equally want NAICOM to establish a board on the payment of eight per cent fire insurance premium to Fire service, to enable them build stronger relationship with the agency.
Currently, fire outbreak is one of the frequently occurring risk but most of the buildings involved are not insured and nobody is doing anything about it except that the Nigerian Corporation of Registered Insurance Brokers has been visiting the victims and encouraging them on the need to insure their belongings. The insurers want the new commissioner to push for regulation that will enforce fire insurance on the citizens to secure their future and at the same time grow insurance premium.
The group also suggested that NAICOM as government adviser on insurance should draw the attention of both the federal and state governments to the aspect of the 2003 insurance law that mandated them to insure their vehicles and ensure that they do so. It noted that currently, many government vehicles are not insured, advising the new commissioner to make government realise that there is no existing law that exempted government’s vehicles from being insured.
The group also suggested that NAICOM should enforce the law regarding fast claims payment to build public confidence on the industry and encourage more Nigerians to buy insurance.
But as the industry stakeholders and operators reel out their demands, the new commissioner also has his own demands on them.
Recently in his maiden speech at his first official outing as the helmsman of the insurance industry regulator, Kari gave the industry and its stakeholders an insight into what he wants to achieve during his tenure.
He revealed his own expectations from the industry operators, the height he wants the industry to attain in his four years and by extension eight years tenure and what he would not want to tolerate from the operators.
Kari in the speech was obviously telling the operators that it will no longer be business as usual in some areas of their professional practices insisting that sanity must be maintained in the industry in order to redeem the lost image.
A glimpse at his regulatory approach ought to have been caught by some meticulous operators even in his position as Deputy Commissioner for Insurance (Technical), as in a few occasions he spoke to the operators, he made no pretense about the fact that his own regulatory approach is based on operators knowing the right thing and doing nothing short of that failure of which will attract his regulatory hammer on such deviant operator.
For instance, his address to the insurers at a seminar on preparation for introduction of Risk-based Supervision model served as a good signal to the insurers on Kari’s regulatory approach . At the seminar, which was held few months before his appointment, Kari told the operators that NAICOM will commence the implementation of the model with a critical review of board of directors and senior management staff of various insurance companies and the management and the structures and processes of the various operating companies as its starting point.
Few days after his appointment, he beamed his regulatory searchlight on the Industrial and General Insurance (IGI) and even on his brain child company Unity Kapital Insurance, issuing regulatory orders on the companies.
The Commissioner, in the order, directed IGI to appoint an auditing firm from amongst KPMG, PWC and Delloitte to conduct a comprehensive financial review of its activities and submit the report to the commission within two weeks of the date of the regulatory order.
According to NAICOM, the firm will undertake a comprehensive review of IGI’s accounting system; conduct capital verification and validate the financial position of the company as at July 31, 2015.
The commission also ordered IGI management not to incur any expenditure in excess of N250,000.00 and not to carry out new investments or dispose any of its assets without the prior approval of NAICOM and should submit monthly report on its activities to NAICOM effective August, 2015.
The Unity Kapital Insurance board was restricted from holding any meeting or taking any further decisions in respect of the affairs of the company during the subsistence of the regulatory order.
Before these, Kari had informed the insurers that introduction of the new and global accepted standard of supervision will ensure that the board of directors and management of insurance firms play their legal role of owing up to the effective management of their companies.
“The directors must take responsibility for managing risks in their companies and maintaining adequate capital to absorb any losses that may arise. The use of appropriate professionals in determining risk appetite of the company, financial provisions to be made and suitable structural adjustments shall be sacrosanct”, Kari warned.
But allaying the fears of the already jittered insurers, he stated: “Don’t see this as the regulator trying to introduce or push a new concept down your throats. We see it as an opportunity for you to learn what it means to imbibe the culture of Risk Based Management. Regulation or no regulation, directors and management must accept their responsibilities to their shareholders, policyholders and all other stakeholders.”
From the tone of his maiden speech, one could deduce that the new commissioner may not be as patient as his immediate predecessor Fola Daniel in matters of business infractions and unprofessional practices as the often stern-looking Kari would out rightly show such operator from his countenance that he has contravened the regulator’s rule and will spell his punitive sentence on the company.
Part of his address to operators at the investiture of Mrs. Isioma Chukwuma as the 47th president of the Chartered Insurance Institute of Nigeria (CIIN), read:
“I want to seize this opportunity being my first official public engagement as commissioner for insurance to say thank you to those who sent messages of congratulations and prayers on my appointment. I join you all in praying that God grants us the strength and wisdom to lift the industry another notch from where it is today.
Speaking on the state of the industry and his expectations from the operators he said, “Current developments in the country obviously call for our collaborative effort to reposition the insurance profession and the industry. We should not be unmindful of the perception of the insurance profession by the public. The apathy towards insurance and the way and manner the profession is being addressed need a rethink from all of us. We all know the whys, let us discuss dispassionately and agree the hows of correcting the wrong perceptions”, he stated.
On regulation of the industry Kari said: “The best approach is always for the professionals to do it themselves.
Left undone, the regulators have no option but to ensure it is done. There is need for a reawakening to ensure only trained personnel are allowed to practice. You will agree with me that insurance services are being rendered by persons and bodies without adequate-training. We- must embrace professionalism as core value in our industry, to achieve that, we must train all persons that carry our flags to our consumers”, he stated.
What this means is that during the tenure of Kari as commissioner for insurance, while the expectations of the industry operators are high on him, there is need for them to sit up in the area of professional and business conduct as there may be zero tolerance to business infractions and minor legal disobedience which hitherto were overlooked or pardoned.