KEYNOTE ADDRESS BY THE FEDERAL COMMISSIONER FOR INSURANCE AND CHIEF EXECUTIVE OFFICER, NATIONAL INSURANCE COMMISSION (NAICOM), MOHAMMED KARI AT THE 2015 CHAMPION NEWSPAPER INSURANCE DAY/LUNCHEON HELD ON MONDAY, DECEMBER 21 AT SHERATON LAGOS HOTEL & TOWERS.
It gives me great pleasure to be in your midst this morning and to deliver this address on the occasion of your 2015 Insurance Day/Luncheon which I am informed is into its 15th edition. I must appreciate the management and staff of Champion Newspapers Limited for its passion for insurance in instituting this forum and for the commitments, dedication and ability to sustain this laudable annual initiative against all odds.
The Commission is proud to associate with you and pledges its continuous moral support of this programme. We are not unaware of the positive contributions of this programme to the industry’s drive for awareness creation, insurance education and penetration in the country. On behalf of the Commission and indeed the entire insurance industry, I say thank you for this contribution to the growth of the business.
The theme of this event “Sustaining Insurance Growth amidst Unfolding Mass Events” is indeed very apt and in tune with current developments in the country which obviously call for our collaborative effort to reposition the insurance industry. We are in the era of change and the insurance sector could not afford to be left behind. Under the present dispensation and a rapidly dynamic environment, the industry certainly cannot continue to apply the same methods and approach of conducting its business and expect a different result.
The Commission is not unmindful of the challenges confronting the industry that requires the collective and decisive efforts of all stakeholders to navigate successfully to safety. It is on this strength that the Commission recently inaugurated an Insurers Committee whose membership constitute Chief Executive Officers of all Insurance Companies, leadership of all trade associations and of course the Commissioner for Insurance. This Committee is to meet regularly to discuss issues and challenges of the sector and proffer possible solutions towards moving the industry to a higher level.
It also provides the operators with first-hand information and the opportunity to contribute to intended policies, circulars and regulations of the Commission prior exposure to the market. This way, grey areas and of conflicts would have been resolved between all the parties at the committee level.
You may all be aware of recent news publications in the media being orchestrated by shareholders of insurance companies putting the blame on the inability of their companies to pay them dividends squarely on the 1% insurance development levy and then fines and penalties paid to NAICOM. We have refrained from joining issues with the shareholders on the pages of Newspapers because we want to believe that they are deliberately being misinformed, misled and used as stooges by management of some insurance companies to cover up their gross financial mismanagement of these companies. The Commission sympathizes with the shareholders because they have a right to be aggrieved over the nil returns on their investments.
Meanwhile, for the benefit of discerning shareholders of quoted insurance companies and the general public, I want to say that as a government agency that believes in the rule of law, NAICOM has never charged insurance institutions any levy outside the law that governs its operations. Let me use this medium to invite management of all insurance companies to make public the charges they have incurred from NAICOM which are outside the extant laws governing the sector. I also urge them to make public the sum total of charges each company has paid to NAICOM at the end of a financial year in relation to their Gross Premium Income that has culminated in their inability to pay dividends to their shareholders.
On the issue of one per cent insurance levy, it is imperative to note that this is a statutory provision of the law and not a regulation of NAICOM. For the avoidance of doubt, section 16 (1)(b) of the NAICOM Act 1997 mandates all insurance institutions to remit one per cent of their gross premium to the Commission as insurance levy. This system of funding of Regulators applies to most sector Regulators in Nigeria – The FIRS, CBN, SEC, NDIC, PenCom, etc
It may also interest the shareholders and indeed the general public to note that insurance is a regulated business. Operators who choose to play in the sector must be prepared to do so in strict compliance with the extant insurance laws. Fines and sanctions for any default/infraction by an operator are clearly spent out in the respective laws to the knowledge and understanding of the operators. The law may not be perfect, but as long as it remains the law, its provisions must be complied with and it is the responsibility of NAICOM, as the statutory regulatory agency of the sector to ensure every operator play by the rule.
We will advise shareholders of insurance companies to demand explanations from their respective managements to ascertain reasons they continue to incur sanctions from the regulator; incur high management expenses; fail to take advantage of the huge potentials in the market and as well, the various market development initiatives introduced by NAICOM to expand their businesses, grow their revenue income and improve on their bottom-line to guarantee enhanced dividend pay out to their shareholders. We are looking at these details and may be making them public in due course.
On the part of the Regulator, and beyond providing leadership and a sane regulatory environment for insurance entities to operate, NAICOM has continually introduced market developmental programmes and initiatives aimed at increasing penetration and assisting insurance institutions enhance their premium revenue generation and, by so doing, increase the industry contribution to the nation’s Gross Domestic Product (GDP).
In 2009, the Commission launched the Market Development and Restructuring Initiatives (MDRI) programme. This is a medium term industry development plan designed by the Commission with focus on the Enforcement of compulsory insurance products, Increase insurance awareness, Reduction in incidences of fake insures/insurances and Increase agency reform. This initiative was successfully launched in the six geo-political zones and Abuja. The Commission also followed up with massive awareness campaign, roadshows and seminars again in all the zones of the country. These efforts were geared towards making the insurance institutions richer and better. The question remains whether the insurance companies have been able to take maximum advantage of this window to grow their businesses.
Also in 2013, the Commission introduced and launched the Micro-insurance and Takaful under the financial inclusion programme to promote rural insurance, drive penetration, increase premium portfolios of insurance entities and generate employment to the teaming youth.
In our efforts to forestall the insistent poor cash flow position of most insurance operators and the attendant inability to settle claims and other operational liabilities, the Commission embarked on the full implementation of the No Premium No Cover as enshrined in the Insurance Act 2003 at the beginning of 2013. Without mincing words, this initiative has significantly increased the cash flow of the insurance industry thus, enhancing its ability to settle genuine claims and other operational liabilities including, payment of dividends to shareholders.
The Commission has also recently embarked on the sensitization of Ministries, Departments and Agencies (MDAs) of government on the compelling need for adequate insurance of their assets. We have equally canvassed the engagement of insurance professionals to handle their insurances to ensure they procure proper insurance policies. We have advocated the need for the MDAs to ensure adequate budgets for the insurance of their assets as well. We have entered into collaboration with relevant government agencies to enforce compliance of certain classes of insurance made compulsory by extant laws in the country. We believe that these drives are capable of providing the much required boost in the growth of the industry.
On a final note, I want to once again commend the Champion Newspaper for its passion for insurance by providing this opportunity annually to converge and discuss happenings in the industry and the possible way forward.
Distinguished audience, I thank you for your attention and wish you fruitful deliberations.
Commissioner for Insurance/CEO