* Companies don’t fail, people kill companies
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Chuks Udo Okonta
The Commissioner for Insurance, Sunday Thomas, has given more insight on how the National Insurance Commission (NAICOM) worked assiduously to save Niger Insurance Plc and Standard Alliance Insurance Plc from failing by providing them opportunity to re-invent themselves, but they were not able to do so.
Thomas, who said this in an interview with journalists recently in Abuja, said. “You are aware that we have cancelled some licences since I came in. It was because we have given them opportunity to re-invent themselves, but they were not able. When that was not forthcoming, we had no choice than to do the needful. So, we have institutions that the moment you are not able to meet your liability to the public, it becomes a concern.
“We have taken over some companies, appointed receiver managers, liquidated the companies; are able to recover all the assets to pay all the liabilities,” he posited.
The Chief Executive Officer (CEO) of NAICOM, submitted that companies don’t fail, people kill companies, adding that the commission is conscious of that and that is why it is trying to be heavy in the area of corporate governance. “If you are the chairman, remain as the chairman. You can’t be the executive and non-executive at the same time. And so much responsibility has been put on the shoulders of compliance officers. Each company is expected to have compliance officers who aren trained from time to time,” he said.
He maintained that there are things NAICOM is doing that it may not necessarily need to advertise, adding that it is only when it is becoming too dangerous to the system that it then becomes obvious to the public.
He remarked that the commission had put some shock absorbers to ensure certain things do not smear on the industry.
“Let me make this clear. regulation or distress management in the financial sector is different from what you have in the other sectors because of the volatility. For example, the origin of AMCON was to absorb non-performing loans created by the operators.
“That means that these volatilities exist despite the big stick wielded by the Central Bank of Nigeria. Regulation does not stop those who want to deliberately commit acts that are not consistent with good practice. But there are consequences,” he submitted.
Thomas noted that today, there are trillions in terms of the assets of the banking sector. But if you try to discount the total assets of the banking sector, with the liabilities that were transferred to AMCON, it will give you the net value of the assets of the banking sector, because without those liabilities, there will be no need for AMCON.
Speaking on how the commission is handling risks that make companies fail, he said NAICOM had put some companies under regulatory order, adding that: “We can’t announce it to avoid panic. In the banking sector, what you put in is what you get. That is not so in the insurance sector,” he said.
He stated that in the insurance sector people pay premium that they may never be a beneficiary of, stressing that someone might had been insuring his car for five years, but nothing happens and he continues to pay premium on a yearly basis. But he is contributing to settle what has happened to others so that if it happens to him, some other people are going to contribute to meet his own need.