Commissioner for Insurance/CEO, National Insurance Commission (NAICOM) Mohammed Kari, President of NCRIB Kayode Okunoren and other industry stakeholders at the recently concluded NCRIB Retreat in Ilesha, Osun State.
KEYNOTE ADDRESS BY MOHAMMED KARI, COMMISSIONER FOR INSURANCE, NIGERIA AT THE 2016 ANNUAL CHIEF EXECUTIVE OFFICERS RETREAT OF THE NIGERIAN COUNCIL OF REGISTERED INSURANCE BROKERS (NCRIB) HELD ON MAY 2nd AT THE ZENABAB HALF MOON RESORTS, ILESHA, OSUN STATE
It is my pleasure to address you this morning on the occasion of this year’s Annual Chief Executive Officers Retreat of member companies of the Nigerian Council of Registered Insurance Brokers (NCRIB).
I commend the NCRIB for exercising great insight in the choice of theme for this retreat which is “Growing Insurance Amidst Regulations.” I believe the topic is apt and in tune with prevailing discourse in the industry.
I am particularly glad that insurance operators in the country are beginning to upscale and accord the desired attention and priority to issues of regulations in the conduct of their businesses. I say this because at a similar Retreat for CEOs of insurance companies organized by the Nigeria Insurers Association (NIA) on February 25th this year, the theme was “Issues in the Regulations of the Insurance Industry in Nigeria”. You may agree with me that this choice of themes by two of the critical arms of the insurance sector is not a coincidence. But whatever it is, I believe it is a healthy one and such that is expected to rub-off positively on the industry.
The broking arm of any Insurance sector occupies a very critical position in the industry and thus remains relevant to the growth and success of insurance business in the Country. I will implore you to see this retreat as very strategic, reason being that it is coming on the heels of current economic challenges in the country. It should therefore be a platform for you to take stock of the key lessons being learnt from these challenges to realign your business focus.
Indeed the Nigerian Insurance market has grown in the last decades. There has also been a substantial increase in the number of players and activities; although and regrettably too this increase in the number of players especially Brokers is yet to reflect on the level of insurance penetration in the Country. The only possible explanation for this could be that intermediaries are not creating new business neither are they expanding their operations beyond the major cities of the country and around a few clients that are already converted insurance consumers. This should be of serious concern to any right thinking professional.
The face of regulation has changed over the years, but the objectives and purposes has continued to be providing comfort and confidence to the consumers while at the same time developing the market.
We all know that confidence is developed by the operators behaving professionally and respectfully. I would believe the invited guest speaker would elaborate on that so I would skip this. The regulator’s task in this respect is to provide an even playing field and to ensure every player plays within the rules of the games. A game with no referee is definately doom to fail.
The task of market development is everybody’s, however it is the trend to quiz the regulator why market penetration is low. Penetration would continue to be low if everyone would only operate from the comfort of the metropolis or chase only existing clients with insurance policies. The regulator’s duty in developing the market can be akin to the baker’s baking the cake. If he decide to bake a flavoured cake, the strawberry, vanilla or chocolate flavour sellers would have to wait for the day he select their flavour. For he cannot bake one cake with all flavours as the consumers would always have their preferences.
The poor penetration of insurance in the country is no more a new statement or information. It is a position we all certainly cannot be proud of. What should be done in this ugly situation is the issue. Developing a robust insurance sector in any country requires developing a good strategy on insurance penetration.
While the newly formed Insurer’s Committee has setup various sub committees to look at that and more issues, the Commission is complementing those efforts by expanding it’s enforcement of compulsory insurance’s down to the states level. In the process we sadly found all sorts of under the table arrangements where insurance policies are being offered in conjunction with various state governments to unsuspecting public. Sometimes with registered Brokers and in most case with unregistered and unlicensed entities. This is Illegal, criminal and punishable under the laws of the country. Brokers and Underwriters alike should beware as we have beamed our searchlight to that direction. Unrepentant companies and individuals that are engaged in these schemes “would answer”. (like we say in the new Nigerian vocabulary)”
We have also identified the limited channels of distribution as a major inhibition factor to penetration. In this regards we have considered the creation of additional distribution channels and have gone far on the preliminary works and draft of guidelines which soon be exposed for input.
We have further decided to explore and develop the mystified partnership type of operation for Brokers. A draft of the proposed guideline will be exposed for input within the next couple of weeks, and I can assure you it will open a new vista in insurance intermidiation in Nigeria.
There is no doubt that there has been increased regulatory oversight in recent times and I can assure you that this would continue. The development and adoption of Insurance Core Principles (ICP) in 2011 by the International Association of Insurance Supervisors’ (IAIS) has transformed the face of Insurance regulation globally. These are rich, global standards, principles and guidelines that address a wide range of regulatory concerns.
These and other principled based modern regulatory innovations are gradually extending to all sphere of financial services business, and it will be naive in my opinion if we think we can avoid their effects on our operations. We have all heard of Enterprise Risk Management, COSO framework, Corporate Governance. We can not deny knowledge of Solvency 1, 2, and 3, Risk Based Supervision and Capital, IFRS etc, etc. I enjoin you all to study these principles, understand them and apply them appropriately whether compelled or not. Insurance business is an international business and therefore cannot be done in isolation.
The Commission is committed to its aim of using information technology to drive the supervision, regulation and governance of insurance business in Nigeria through the e-regulation program. Parts of the e-regulation program are the Business Process Management (BPM) Project and the NAICOM Portal which will provide a direct interface with the industry to ensure greater accountability and transparency and would speed up service provision to the industry.
The BPM Project is aimed at automating NAICOM’s core business processes covering the especially the Authorization & Policy (A&P) and Inspectorate Directorates. The processes majorly cover the registration and renewal of licenses of operators; Approval in Principle (AIP), Attestation and New Product approvals and, On-site Inspection processes.
NAICOM is very committed to these projects and the tremendous value to be returned from their implementation. There is no doubt that this would bring multiplier effect in the area of efficiency of operation, better reporting and ease of supervision activities.
It is expedient to note that prior to the recent economic challenges, pressure was building for the insurance industry to be more flexible and to approach business in a more dynamic fashion. In particular, keep in mind that while insurance has always been a highly-regulated industry, new regulations and legislation are proposed and adopted on a regular basis. Increasing compliance demands from other regulatory bodies require more agile processes that can evolve and adapt on a continuous basis, but that also offer varying levels of control over how they are executed.
Insurance institutions must find a way to break out of the silo’ed, legacy systems which perpetuate a limited view of the customer. It is this view that impresses on us that we are doing well when we snatch a client from another or when we get on a long list of the Brokers of a fat government client, though adding no value at all. New models of business and enterprise architecture need to arise; where integrating with newer technology solutions and affecting process improvements that leverage the capabilities of existing personnel and applications can become the norm.
Ladies and gentlemen, I thank you for your attention and wish you a successful retreat.
Commissioner for Insurance/CEO