The requirements for re-registration of the 108 lapsed insurance broking licences were considered too stringent by some brokers, especially with the payment of N2.25 million licensing fees and N 250,000 appeal fees each, among others. However, there have been suggestions of merger among the affected broking firms to scale this hurdle, but it seems the broking fraternity is not ready for this marriage. ZAKA KHALIQ writes.
In December, 2015, to be precise, the National Insurance Commission (NAICOM) waged its sledged hammer on the broking fraternity by lapsing the licences of 108 insurance brokers in the country.
The affected brokers were said to have failed to meet the regulatory requirements and the erring firms had their names published in national dailies.
Newswatch Times learnt that majority of the erring firms were sanctioned for violating certain provisions of the insurance law, such as; late submission of their returns to the regulatory body, while some did not even submit returns for several years, non-renewal of operating licence, among other offenses.
The affected firms include; Accredited Insurance Brokers, ACI Insurance Brokers, Alpha Insurance Brokers, APL Insurance Brokers, Atlantic Insurance Brokers Ltd, Ariel Insurance Brokers Ltd, Arimok Insurance Brokers, Aso Solid Insurance Brokers, Ayeson International Insurance Brokers Ltd, Backley Insurance Brokers, Barmco Insurance Brokers Ltd and Beaver & Roger Insurance Brokers.
Others are; Biscons Insurance Brokers, Chase Insurance Brokers, Clackson Edu & Co Ltd, Classic Insurance Brokers, Continental Risk Care Insurance Brokers Ltd, Concris Insurance Brokers Ltd, Crestfield Insurance Brokers, Cusworth Insurance Brokers, Cute-Citizen Insurance Brokers, Dadafa Insurance Brokers, Dayspring Insurance Brokers, among others.
When their names were made public then, the commission said the affected firms would not be allowed to renew their operating licences, while those who are still interested to continue operating in insurance industry would be asked to apply for a fresh licence.
This development unsettled the broking fraternity, as they fear for the worst, since this development is expected to send many brokers into the labour market.
To this end, the brokers, under the auspices of the Nigerian Council of Registered Insurance Brokers(NCRIB) met NAICOM, over granting of soft-landing to the affected brokers.
The commission, however, informed the brokers that it does not reinstate lapsed licences and that the only assistance it can render the brokers was for them to apply for a new licences, passing through the rigour of obtaining new licences, but that this time, they can register their firms in their old names.
To this end, NAICOM ordered each of the 108 lapsed insurance brokers to pay N2.5 million, among other requirements, which will qualify them to re-register their lapsed firms in old names.
This aforementioned sum was an amount considered by many brokers as being too huge, taking into consideration, the economic recession the country is battling with, of which the insurance industry is one of the most affected.
While some brokers have started the process of getting back their licences, others are still sceptical on the requirements needed to have their licences reinstated.
To this end, some experts are clamouring for merger in the broking fraternity so that most of the affected firms could pass through this hurdle, but it seems the brokers are not interested in this model, preparing to be known and called managing director of their firms rather than forming a partnership.
Processes for re-registration
The commission ordered each of the affected firms to pay N2.5 million which will qualify them to re-register their lapsed firms in old names, Newswatch Times learnt.
The amount in question, will cover the payment of License Fee of N2,250,000, and a Letter of Appeal giving reasons why the last licence lapsed and payment of N250,000 non-refundable fee for processing of the appeal.
The commission equally charged the intending broker to submit Certified True Copy of CAC’s Forms C02 and C07, Evidence of payments of the fee and payment of all outstanding ISS levies due before the license lapsed.
Other requirements listed in the circular include: Nomination of qualified CEO and Executive Management for NAICOM’s approval; Submission of a Management Account/Statement of Account as at the last day of last month of the period since the last approved account and apply for NAICOM’s approval of the Members of the Board of Directors.
NAICOM pointed out that there would be re-registration Inspection of Broker to determine non-violation of the Insurance Act and payment of penalties for identified violations/non-compliance, while the interested broker is to attend and be successful at the re-registration interview.
According to the commission, interested brokers are requested to submit; Professional Indemnity, Sworn Declarations, Other Declarations, Tax Clearance for the expired period of license, Certificate on Oath from the External Auditors, after which the licence would be issued to those that fulfill all the listed requirements.
The re-registration, findings show, means that the affected brokers would have to meet the listed requirements before getting licence in their old names.
The brokers, according to findings, considered these requirements too stringent and had made several attempts to persuade the commission to temper justice with mercy, but it seems NAICOM is not ready to change its stand.
Speaking on this development, the President, NCRIB, Mr. Kayode Okunoren, said, even though, the council only had 21 broking members affected, the gesture granted by the commission, is applicable to all affected brokers.
According to him, “The action we took does not only favour the 21 brokers, who are our members, but we are talking generally on the interest of all affected brokers. And that has led the commission to come out with this decision. Unlike before, when they say your licence is lapsed, it means it is dead and cannot be reawaken. But we, as a body, knows that it will be calamitous, and that will send a lot of people into the unemployment market, thereby creating problems for their families.”
To this end, he added that, “So, the take is that NAICOM has now come up with a seven paid arrangements whereby the re-registration of those lapsed licences can commence. Before, you cannot resuscitate a lapse licence, and now, the window of opportunity has been opened for those who still believe they can play by the rules, because when you are in a regulated environment, you have to abide by the rules and guidelines therein.”
NAICOM said brokers whose licences were recently lapsed could re-register in their old names.
This, it was learnt, was an outcome of a meeting which held last week in Abuja between the executives of NAICOM and NCRIB, who represents the interest of the concerned brokers.
However, the affected brokers are expected to meet all the requirements needed for new licences, but could maintain their old names, a development meant to allow them retain their numerous customers.
Our source at the meeting quoted the Commissioner for Insurance, Alhaji Mohammed Kari, as saying, once a licence elapse, it is assumed as dead and cannot be resuscitated, hence, the only lifeline the commission could grant the brokers was to use their old names in the re-registration of their firms.
The source noted that the Commissioner for Insurance informed the brokers to do the needful, as the commission would no longer grant audience on the above issue again.
According to Kari, “We don’t seem to appreciate the meaning of lapse. If a licence lapses, it means it is dead. What we are doing now is to offer them opportunity to take another licence. It is not the reactivation of the lapsed licences, because they will have a new number, only the name can remain the same. Since 2014, we have been given this window of opportunity, so, this is not the first time.”
While speaking on brokers that were granted this same window of opportunities in 2014 and were still affected by the current exercise, he said: “So, for someone to have been reissued a new licence and allowed it to lapse again the same year, I think such an operator is in the wrong business, he does not qualify to be a broker. Broking is a corporate business that requires a lot of legal requirements.”
Okunoren, on his part, therefore, appreciated the commission for giving the affected brokers lifeline to re-register their outfits in the old names, stating that the cordial relationship between the two bodies continue.
Will merger be the way out?
Some experts have called on the lapsed insurance brokers to adopt mergers, and possibly, acquisition, to get through this hurdle.
An expert, who spoke on the condition of anonymity last week, urged the embattled
brokers to urgently embrace merger to enable them take advantage of the opportunities provided by NAICOM.
The expert posited that the best option opened to the affected brokers, is for like minds to come together and use their expertise to form bigger broking firms.
The analyst urged the brokers to maximise the sharing scheme, put their resources together to surmount the enormous demands confronting brokers.
“I have always believed merge and acquisition is the way forward for brokers. The affected brokers should take advantage of sharing scheme. Those who are good in marine underwriting should unite with others that are good in oil and gas; aviation; and other business classes to form bigger firms for which they would be respected.
“Brokers should learnt to swallow their pride, they should come together, harness their resources and let go their ego of being want to be address as Managing Directors.
The public would respect a firm made up of competent professionals who can handle risks from classes,” the expert said.
The analyst maintained that going forward, insurance broking practice would be tough as demands arising from International Financial Reporting Standard (IFRS), regulators and insurance law may force small players out of business.
According to the expert, the passage of the consolidated insurance bill into an Act, would affect NCRIB Act, stressing that it is high time brokers begin to consider merger and acquisition to enable them remain afloat.
Earlier, Okunoren said, for now, the association is not forcing or moving for merger as a way out of the current position, but added that adopting the module is to the discretion of the individual brokers affected by this development.
He said the N2.5 million, though might be an issue to some small brokers, but that some have already kickstarted the process of re-registering their firms, saying, NCRIB, as an association, has not preached merger for its members to have their lapsed licences re-registered.
Each individual broker has the discretion to decide on whether to adopt merger or not, but NCRIB cannot mandate members to adopt it, unless they individually decide to merge and that is a personal arrangement, he said.