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Chuks Udo Okonta
The National insurance Commission (NAICOM) in line with one of its 2017 regulatory priorities, which is to regulate the management expenses of insurance companies, has put a limited on the spending of some firms.
The Commissioner for Insurance, Mohammed Kari, told Inspenonline that from the observation made on the 2016 financial accounts, submitted by some companies, those with high expenditure profiles, have been mandated not to spend beyond certain limit.
He noted that the decision was taken to ensure companies do not spend unnecessarily to the extent that they would not be able to attend to claims settlement.
NAICOM’s top priorities for this year include: Market development; Capital verification; Management Expenses of Insurance Companies; Statutory Returns; Risk Based Supervision; Information Technology; Competence of Directors Senior Management and Persons in Control Functions; Corporate Governance and Service Delivery.
High management expenses incurred by some insurance firms is really impacting their operations negatively, as the industry spent over N294.90 billion on management expenses in five years.
Management expenses, include, underwriting expenses, salaries, rents and others excluding commission to agents.
A report obtained from the Nigerian Insurers Association (NIA), revealed that non life operators incurred N220.91 billion and life operators N73.99 billion between 2010 and 2014.
According to the NIA, Non Life insurance companies spent N52.12 billion on management expenses in 2014, representing 0.28 per cent of the N184.97 billion gross premium income made in the year. Whilst Life operators spent N23.60 billion, 0.22 per cent of N108.58 billion gross premium income.
The report showed that on Non Life operations, Investment and Allied Insurance Plc, had the highest expenses, put at N169.50 million, 38.53 per cent of N4.40 million gross premium income it recorded. The firm was followed by Fin Insurance Plc, N854.16 million, 1.07 per cent of N795.73 million underwritten and NICON Insurance Plc, N1.58 billion, out of N9.45 billion GPI (0.17 per cent)
For Life business, NICON Insurance Plc, had the highest, expending N453.80 million, out of N92.04 million GPI, (4.93 per cent), SpringLife Assurance Plc, N105.28 million out of N32 million GPI (3.29 per cent) and Unic Insurance Plc, N742.81 million, out of N259.31 million GPI, (2.86 per cent).
The NIA report, stated that the Nigerian Agricultural Insurance Corporation (NAIC) in 2015 wrote a gross premium income of N1.04 billion, but had management expenses of N1.10 billion, a ratio of 1.07 per cent.