In spite of the economic recession, the Nigerian insurance industry performed better in 2016 due to stricter enforcement of the Code of Corporate Governance.
The improved performance was particularly due to enforcement of rules against unethical practices, under capitalisation and rate cutting, among others.
Although the industry felt the adverse effects of recession in the first three months of the year as insurance penetration fell and caused corporate losses, but NAICOM acted swiftly to reverse the trend.
NAICOM developed a “black book” for insurance firms that failed to comply with its regulations to salvage the industry.
NAICOM, in its bid to aggressively embark on the “recovery path” to eliminate unethical practices and enforce its code of governance 2009, relocated its inspectorate directorate from Abuja to Lagos.
The commission also embarked on aggressive insurance awareness talks and shows that created effective channels for insurance products distribution among others.
Alhaji Mohammed Kari, the Chief Executive of NAICOM, who is also the Commissioner for Insurance, told the News Agency of Nigeria (NAN) that the code was also being enforced to make sit-tight managing directors leave the helm of affairs after their ninth year.
He said the relocation of its inspectorate directorate from Abuja to Lagos had increased effective supervision since 90 per cent of the companies it supervised were in Lagos.
Kari said the enforcement of the rules led to increase in the estimated volume of business underwritten by the industry to N350 billion from N294 billion in 2014.
“By 2017, we expect volume of business underwritten to hit N600 billion.
“Similarly, the industry experienced more claims from the non-life segment for the period as gross claims paid from non-life business stood at N51,061,483, while gross claims experience from life stood at N35,946,322’’ he said.
The Nigeria Insurers Association (NIA) threw its weight behind NAICOM on the increased enforcement of regulations.
Mr Sunday Thomas, the Director-General of NIA, said only practitioners with skeletons in their cupboards would kick against the development.
Mr Val Ojumah, the Managing Director, FBN Insurance, said no practitioner should be against increased enforcement of rules to sanitise the industry.
Ojumah said that every sector and society needed strong enforcement of regulations to bring about order.
“Every sector and society need enforcement of laws and regulations that will bring order to the practice, it will be shocking if any practitioner is against increased enforcement.
“I am not against the enforcement and regulation, especially the Code of Governance and Risk Based Supervision (RBS) and neither should any practitioner be.
“Unethical practice has been an issue in the industry, but should we continue in the old ways? I don’t think so,“ he said.
Ojumah said code of corporate governance had been in the insurance statues since 2009 and “it is commendable if NAICOM takes responsibility to bring it up to pave way forward for the industry”.
Mrs Yetunde Ilori, the Managing Director of Axa-Mansard, said there was the need to make insurance a household name to increase its performance.
“Insurance is not an household name as it is in developed countries; there is need for all insurance companies to expand their capital base to eliminate under-performance,’’ she said.
The Minister of Finance, Mrs Kemi Adeosun, challenged NAICOM and practitioners on unethical practices, stressing that the industry could do more.
Adeosun said the industry had been under-performing compared to its pension and banking counterparts
She said that the industry had been denying the country a whopping 1.5 per cent annual increment in Gross Domestic Product (GDP).
Adeosun identified low awareness of insurance in Nigeria as one of the factors responsible for the industry’s under-performance.
She said that out of 57 insurance companies operating in the country, less than 23 advertised their products.
“The companies put in less than 20 adverts on television, less than 10 adverts on radio and less than 10 adverts on social media annually.
“Other factors include poor distribution channels and unethical practices among operators,” she said.
The minister said that there was immediate need to address these issues, stressing that 0. 33 per cent increase in insurance penetration could result to a growth of 0.5 per cent in GDP.
The minister also said that this growth was capable of creating over 70,000 jobs annually.
The beauty of the new development is that insurance operators have realized that there is need to sanitise the industry and stop their old ways of doing business.