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Special audit looms over Insurance industry

By Patience Saghana
A special audit to determine the financial health of insurance companies is looming over the insurance industry.
Vanguard was reliably informed that the National Insurance Commission (NAICOM) is set to embark on a sanitisation exercise akin to the one recently conducted by the Central Bank of Nigeria (CBN).

It would be recalled that the CBN, in a bid to sanitise the nation’s banking industry, conducted an audit of banks, which led to the removal of the chief executives of eight banks. NAICOM, it was gathered, is considering conducting a similar audit of insurance companies to complement the efforts of the CBN. It was gathered that insurance regulators are considering the approach to be used in the sanitisation exercise to make it effective and with minimal damage on public confidence in the sector.

This was further confirmed by the Commissioner for Insurance/Chief Executive of NAICOM, Mr Fola Daniel at the just concluded 2009 Professionals Forum organised by the Chartered Insurance Institute of Nigeria (CIIN). He said whatever method the regulatory body is going to use to sanitise the industry will be mild but effective.

He admitted that there is problem in the sector though not as severe as that of the banking industry. “We have problem in the insurance industry but it is not the same as we have in the banking sector”.

He warned, “But I will advise that you do not take to heart that NAICOM will not wield its sticks on the sector any time soon as ‘no condition is permanent.

“For those who will continue to relate as if anything and everything is possible, let me warn that NAICOM will deal decisively with aberration and also collaborate with other regulatory and security agencies to curb market misbehaviour and rascality.
“This is not in any way an attempt to drive fear into the minds of operators, far from it; it is all aimed at improving the way we do things so that we can get the public to buy into the new roadmap.”

Most of the speakers at the forum also made veiled reference to the impending sanitation of the industry, counselling one another to turn a new leaf and shun unethical practices.

Mr Sunny Adeda, CIIN president admonished insurance professionals to be mindful of whatever they do and also bear in mind that they are ambassadors of the nation’s insurance industry.

Adeda said, “As professionals, we have made immense contributions to the economy of our nation; we have driven the machineries of our companies with our expertise while our efforts have helped to mobilise funds for economic growth; we have contributed to financial stability and promoted enterprise by virtue of our primary role of indemnifying businesses against loss; our risk management expertise have remained instructive and beneficial for national investment decisions and continued to have salutary effects on the national economy.

“The annual Professionals’ Forum is therefore an avenue geared at promoting and sustaining these ideals and ensuring that developments which are capable of eroding these gains are stemmed. By providing opportunities such as this forum, for knowledge sharing and setting requisite standards for our practice, the Institute is avowed in demonstrating commitment to the advancement of the insurance profession at all times.”

Mr O’tega Emerhor, Group Chief Executive Officer of Standard Alliance Insurance Group posited that the country’s insurance industry should at all times hold the image of the sector in high esteem without having to be tailored.

Emerhor advised, “Every genuine profession should and be immutably committed to some basic laudable objectives. The objectives include unquestionable expertise in the fundamental activities of the profession, the advancement and sustenance of high ethical standards and the maintenance of a good public image and a premium identity in the public eye for both the profession and its individual members.”

Professionalism and good behaviour, he pointed out, are more critical especially given the global financial crisis.
He said that practitioners should purge themselves of any act capable tainting the image of the sector. “ Rate cutting and cash underwriting and other warped practices not only depress the fortune of the industry as a whole but also engender anarchy and mistrust among professionals”.

He asked rhetorically, “Why don’t we begin as both individuals and professionals to change our performance metrics and, occasionally, reviewing the metrics we use to measure how well we are doing? The global financial crisis is a challenge and not a problem”.

He restated, “It is pertinent that professionals always remember that they are the custodians of the ethics of their profession, trade or vocation. Above all, we must practice what we preach and stop parading ourselves as professionals whereas we act otherwise”.

Mr Adeyemo Adejumo, Managing Director of Continental Reinsurance Plc admitted that a lot of things are indeed going on in the insurance industry but rather than those vices decreasing, they are mounting.

It is at that juncture that Adejumo implored the CIIN to avail the industry copies of the sector’s Codes of Conducts and Ethics which every practitioner appended to before be signed on in the sector.

For those insurance chieftains that are under pressure by their investors, the Continental Re boss challenged them to call their bluff and hold tight their integrity.

Mr Bola Temowo, Chief Executive of International Loss Adjusters on his part, cautioned insurance companies to cut down on operating expenses and focus more on the bottom-line.

He said, “None of the insurance industry’s yardsticks for measuring big players such as the number of branches a company has; including earnings growth or the combined ratio, which represents the percentage of total premium income spent on policyholder claims and operating expenses but the consistency of the bottom-line of the company that matter most. And that, he said, has demonstrated statistically significant links to shareholder returns”.

Dynamic insurers, Temowo believed, deliver what shareholders prize above all: revenue that increases at a brisk, steady pace.
“Knowing that sustained top-line growth is the path to superior returns for investors is one thing; generating that growth year after year is another matter. It is not in the number of branch offices an insurance company has that counts but the bottom-line.
Mr Rotimi Edu, an insurance broker noted that insurance companies still have a long way to go in terms of risks assessment which they had for a very long time not improved on rather followed the age-long guidelines of risks assessment.
Edu who represented Mrs Laide Osijo, vice-president of the Nigerian Council of Registered Insurance Brokers (NCRIB) said times have changed and every policy has its own peculiarities and cannot t


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