Foreign operations: Insurers keep stakeholders in the dark
By ROSEMARY ONUOHA
Stakeholders of insurance companies with offshore operations have been in the dark regarding the success or otherwise of these foreign investments as the affected insurance companies refuse to keep a consolidated account of all their operations.
As a result the National Insurance Commission (NAICOM) has not been able to measure the viability of such foreign operations.
Commissioners for Insurance, Mr. Fola Daniel, who made the disclosure, noted that the Commission is not in a position to determine the success or otherwise saying, “It is difficult for me because we are not operating on the basis of consolidated balance sheet.”
He however stated that going forward, the commission might move ahead to bring such things under its purview by making it mandatory for insurers doing offshore business to submit consolidated financial statements to it periodically.
“When you said the balance sheet of an insurance company is consolidated, it means that the businesses of the company in Rwanda, Ghana and other places will reflect in the same books. You can look at the books and say this is how much each subsidiary or branch is contributing.
Financials of activities
We are going to state henceforth that you will give us the financials of your activities outside Nigeria, so that we truly see what the impact is,” he said.
Daniel reiterated that he has a personal opinion on Nigerian companies going to establish abroad, stating “I believe many of our companies are chasing shadows because some of the countries they went to establish subsidiaries do not have insurable interest as big as what you can find in Surulere Local Government alone.
For instance, Zambia has a population of 1.3 million and if you add people who are staying in Zambia illegally you will still have less than 1.5 million people the entire population. If you then look at the adult population who can take one form of insurance or the other, usually this will be less than one-third of that 1.5 population. So we are looking at about 500,000 people buying insurance products. However, we have more than 500,000 people living in Surulere Local Government and I believe that if our market is not sufficiently exploited, we should not have any business going outside.
“That is not to say that we should close our shops and our investments outside Nigeria because it is good and it will give us a good name if the businesses are being conducted in line with the international best practice,” Daniel stressed.
Daniel posited that it does not make regulatory sense to allow operators to divert capital raised locally to countries whose population may be smaller than that of a local government in Nigeria when the local market is yet to be fully explored.
According to him, the regulatory body may have to insist that operators seeking approval to venture into foreign operations would be asked to open more local branches to take care of the local market before such approval is granted.
“The unofficial position we are taking is that if any company is seeking approval to go to Ghana or so now, we want to know how many branches it has opened in Nigeria first. If we are saying we need to deepen insurance in Nigeria we cannot do so by going to Ghana. I will be interested if you are saying that you want to open 10 more branches across Nigeria.
It is not in our guidelines but I am sure we are going to take that kind of reasonable posture.
We are not going to say no to your going to Ghana but open five or six more branches let us see them work and you will now come back and to ask for permission to go to Ghana,” Daniel said.
