NAICOM bars MDAs from engaging unlicenced brokers, agents in insuring government assets

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Chuks Udo Okonta

The National Insurance Commission (NAICOM) in a move to ensure ethical practices in the insurance of government assets and liabilities has enjoined all Ministries, Departments and Agencies (MDAs) not to interact, engage or transact any insurance business with any insurance institution unless the institution is duly licensed by it.

NAICOM stated this in a Guidelines for Insurance of Government Assets and Liabilities for Ministries, Departments and Agencies of Government and Other Stakeholders, issued on October 28, 2023.

The insurance industry regulator submitted that MDAs shall ensure that all government assets and liabilities in their custody/supervision are adequately insured at all times, stressing that all MDAs shall procure insurance cover for
adequate protection of Government assets and liabilities including mandatory items to be insured which falls under compulsory insurance policies and that this would however, be subject to budgetary appropriation by the MDA(approved budgetary provision).

It said MDAs shall provide information annually to the commission on all its insurances, adding that in compliance with the premium collection and remittance provisions in the market conduct guidelines, insurance cover for an MDA shall only be provided on a strict No Premium No Cover basis.

The Commission noted that MDAs shall effect payment of premium to enable renewal of their insurances not later than the effective date of the insurance contract.

It said in order to ensure that government gets value for money in the conduct of its insurances, an MDA shall establish and/or maintain an insurance Desk/Unit that will be responsible for the coordination and management of its insurances.

NAICOM stated that an MDA with substantial volume of the insurance needs shall dedicate a division, department or section as may be appropriate.

The insurance Desk/Unit, it said shall be incorporated in the organisational structure of the MDA and shall be headed by qualified and experienced personnel dedicated to handle insurance of the organisation

The regulator posited that the insurance Desk/unit shall liaise with NAICOM on relevant insurance matters for
advice where necessary, adding that an MDA shall ensure that adequate personnel are provided for the effective coordination and management of its insurance needs.

An MDA, it said shall notify the commission of the appointment of the head of the insurance Desk/Unit. The notification shall be accompanied by the profile and curriculum vitae of the appointed officer.

The insurance Desk/unit shall be manned by persons who have the relevant technical experience and professional skills in insurance. At a minimum, the person must have relevant University degree or its equivalent as well as relevant professional qualification and experience in insurance, NAICOM stated.

The insurance industry regulator, stated that as an adviser to Federal Government of Nigeria on insurance related matter, it observed challenges on the insurance of Government Assets and Liabilities which has led to avoidable expenditure by the Government.

It maintained that consequently, in
exercise of the powers conferred on it by the provisions of National Insurance Commission Act 1997, Insurance Act 2003 and all other powers enabling it in that behalf, The National Insurance Commission with the approval of the Honorable Minister of Finance and Coordinating Minister of the Economy issues the “Guideline on the
Insurance of Government Assets and Liabilities” as minimum set of requirements for insurance of
government assets and liabilities and in pursuance to the Circular issued by the Secretary to the Government of the Federation (SGF) and NAS Resolution Referenced NAS/CAN/35/VOL.1/539 22.

NAICOM stated that the guideline shall apply to all activities incidental to insurance of assets and liabilities of the government of the Federal republic of Nigeria.

It maintained that all MDAs and relevant stakeholders are required to comply with provisions of the Guideline.

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