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Chuks Udo Okonta
The National Insurance Commission (NAICOM) today said shareholders are deliberately being misinformed, misled and used as stooges by management of some insurance companies to cover up their gross financial mismanagement.
The Commissioner for Insurance Mohammed Kari, said this at the 2015 Champion Newspaper Insurance Day/Luncheon in Lagos, stressing that the claim by shareholders that their dividends are not paid due to one per cent insurance development levy, fines and penalties paid to NAICOM is far from the truth.
He said: “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.”
He noted that NAICOM has never charged insurance institutions any levy outside the law that governs its operations and called on management of all insurance companies to make public the charges they have incurred from NAICOM which are outside the extant laws governing the sector
“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,” he said.
He posited that the issue of one per cent insurance levy, is a statutory provision of the law and not a regulation of NAICOM, adding that 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 and that this system of funding of Regulators applies to most sector Regulators in Nigeria – The FIRS, CBN, SEC, NDIC, PenCom and more.
“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,” he said.
Kari advised 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,” he added.