By Patience Saghana
The National Insurance Commission (NAICOM) has taken the fight against unethical insurance practice to the media appealing to insurance correspondents to help in exposingÂ any act inimical to the ethics of insurance.
â€œThe Commission and the media must come together to build an insurance industry of noteâ€, said Mr. Fola Daniel, Commissioner for Insurance.
â€œReporters could question the statement of investment of an insurance company which represents the insurance funds to ascertain its compliance both in content and spread with the relevant provisions of the law and endeavour to report on the security, quality and overall performance of such an investment without prejudice,” said Mr Nicholas Opara, Deputy Director (Supervision), NAICOM.
The two officials spoke atÂ a two_day training programme organised by the NAICOM to empowerÂ insurance correspondents for effective coverage of the insurance sector..”No doubt, there are one or two shortcomings in the industry. But we are doing everything possible to improve on this. If you keep talking about the
challenges and ignoreÂ efforts to address them, the impression would be that all is not well with the industry. For as long as the impression lingers, so long will the public continue to see the sector as one cheat and you know that is not true. So let us join hands to build a strong insurance industry that we can all be proud of.
“A journalist should endeavour to work within the confines of ethics written and unwritten and the laws. And the work could include revealing scandals and tracing infringements of laws, rules, or morals. To be effective in investigative journalism the journalist must have high standards of functioning and be above corruption.
NAICOM boss remarked, ‘Let me quickly say that the commission has always enjoyed a warm relationship with the media over the years. That is not to say that the media have not in one or two occasions misrepresented our views. That is to be expected in every human relation but this may not be very good for the insurance industry.” Insurance,Â he recapped, is built on trust and so much has been done to build public confidence in the sector of late and much more is still being done. It would therefore not be nice if journalists continue to report stories that could erode the little confidence the public now have in the industry”
HighlightingÂ measuresÂ taken by the commission to address shortcomings of the sector, Mr Sunday Thomas, NAICOM Director (Inspection)Â said the regulatory body has been able to substantially increase the capital base of insurance and reinsurance companies operating in the sector.
Other steps taken by NAICOM, according to Thomas, included the enhancement in the industry policy guidelines; issuance of industry Codes of good Corporate Governance;Â review of brokers authorization and renewal procedures; sustenance of domestication vis-avis the Nigerian local content policy;Â review of group arrangements, increase in the market surveillance; investment in education and public enlightenment programme; internal restructuring for enhance efficiency; development of an industry IT policy and improved Anti_Money laundering compliance, amongst others.
He said the industry is already in line with its vision to be the insurance industry of choice amongst the emerging markets noted for high market capacity, transparency, efficiency and safety to attain the position of one of the 20 largest insurance markets in the world by the year 2020.
In a paper titled, ‘Achieving the Trillion Naira Market with the Market Development and Restructuring Initiative (MDRI)’,Â Thomas saidÂ that there has been considerable improvement in the performance of the industry in the last three years.
From a market capitalisation of N200 billion in 2006 to N550 billion in 2008, the sector’s gross premium income of the market increased from N93billion in 2006 to N179.4Â billion last year.Â Assets base of the sector rose from N171.9billion three years ago to N500 billion as at December 2008 whilst the world ranking of the sector had also moved up from 65th position to 61st last year.Mr Sam Ordu, NAICOM Director, Finance andÂ AdministrationÂ Â delivered a paper on Operational Modalities for the Observance and Promotion of Good Corporate Governance in the Insurance Industry, pointed out thatÂ the insurance industry was notÂ immune from the global financial crisis.
Ordu stated, “The current global meltdown has expectedly caused distress in the economy, eroded confidence, diminished the value of financial assets and created uncertainty for business, consumers and the government”On the impact of the crisis on the insurance industry, the finance director said, “The insurance industry as part of the financial services sector generates
pool of long term investible funds from policyholders which are invested in the capital market. As a result of the financial meltdown, the shares traded in the capital market have been eroded thereby causing loss of investments to investors including insurance institutions”
But insurance companies rather thanÂ safeguarding their bottom_line, expendedÂ energy on managing their investment portfolio and underwriting risks because of the fear of the crisis.
He said the commission had in the past taken stance measure against abuse of market rules and regulations. “NAICOM has a range of actions available in order to apply appropriate enforcement or sanctions where problems are encountered such as restricting business activities; stopping the writing of new business; withholding approval for new activities or acquisitions; directing affected companies to stop practices that are unsafe and unsound; removing directors and managers and as far as revoking the license of an insurer.
“There is need to build trust, confidence through transparency, accountability, good corporate governance and robust infrastructure in order to thrive to create a level playing field for the emerging global market and at the same time, restore confidence in the system”.
He therefore said the industry Code of Good Corporate Governance is veritable instrument towards achieving the industry vision and therefore urged, “All stakeholders need to know limits and boundaries and when their activities may become unethical, improper, illegal or otherwise”.
To empower insurance correspondentsÂ for in_depth news analysis of financial health of insurance companies,Â Mr Nicholas Opara, Deputy Director (Supervision) took journalists through Effective Reporting on the Financial Statements of Insurance Companies.
HeÂ said financial reporters are free to enquire and confirm solvency status of insurance companies and thus request for a certification issued to insurance companies by external auditors stating that an underwriter has satisfies the margin of solvency require underÂ Section 24 of the Insurance Act 2003 whilst a confirmation from the commission would authenticate the status of the company in question.
According to him, “The reporter should investigate and report on the company’s ability to meet deadlines with respect to rendition of accounts and other statutory returns. Section 26 (1) of the Act requires an insurer to submit its audited accounts and annual returns to the commission not later than 30th June of each year. Quarterly returns are also to be filed not later than 30 days after the end of the quarter”.
He continued, failure to meet deadlines may be an indication that all is not well with the company. Such failures usually attract fines and penalties and the reporter should enquire further if such payments reflected in the company’s accounts. The reporter should also confirm if NAICOM has approves the latest audited accounts and annual returns submitted by the company”.
Opara, whose paper was chaired by Mallam Ahmed Arabi, Director, Administartion and Human Resources of the commission said that the quarterly returns of insurance companies to NAICOM are a means of monitoring the development and progress of each company.
Mr Timtak Madziga, Deputy Director (Research, Statistics & Information Technology) moderated the interactive session during the training. HeÂ said the
insurance industry would achieve a lot more with more insurance agents coming on stream, adding that insurance industry could in no time attain its
N1trillion premium income target with insurance agents spreading their wings far and wide the nooks and crannies of the country.
In respect to meeting the percentage target of the Nigerian local content policy of 70 percent by 2010, Madziga said that industry is not doing badly in the
oil and gas business, though noted that the pace of the percentage is slow but the participation of insurance companies in the business is commendable compared to the past.