Year 2012 has been a very challenging one for insurance operators in the country. ROSEMARY ONUOHA reviews some of the major events that shaped the industry in the course of the year.
In the course of the year, insurance operators were subjected to series of reforms both from the financial regulators and self imposed reforms. As the development became unbearable for operators, many of them came out to decry the harsh effects of these reforms.
In 2012, insurers and reinsurers were mandated to transit to the International Financial Reporting Standard, IFRS; change their financial year end from July to March, compel the general public to accept and patronise the compulsory insurance products; key into the Federal Road Safety Corps database scheme by aligning their own database with that of the FRSC as well as instituting anti-money laundering processes in their systems.
Also all insurance and reinsurance companies were mandated to establish a Risk Management Department/Unit as part of their risk management strategy by 1st July, 2012.
According to the guideline for developing a risk management framework for insurers and reinsurers in Nigeria by NAICOM, the Risk Management Department/Unit shall be responsible for measuring, monitoring and controlling risk, consistent with the established policies and procedures.
According to NAICOM, risk is the possibility that an event will occur and adversely affect the achievement of a company’s objectives thereby decreasing value for the company’s stakeholders while risk management is the process of identification, assessment and mitigation of risk to which the company is exposed. And all insurers and reinsurers must comply with all the provisions of the guideline.
Decrying these reforms, operators lamented that many companies may not have the capacity to withstand them all.
However, NAICOM insisted that insurers and reinsurers just have to look for avenues to realise the various reforms because the insurance sector will not sit back while the rest of the world move on.
On the 3rd of June, 2012, a Dana Airways flight from Abuja crashed in Lagos at Iju-Ishaga area killing everybody on board.
Seven local insurance companies led by Prestige Assurance Plc promised to pay their share of 30 per cent claims in the $4.5million insurance premium paid by the management of Dana Airline for insurance of the aircraft.
The ill-fated plane was insured and had a combined single limit of $350million out of which 30 per cent was retained in the local market led by Prestige Assurance Company and 70 per cent insured overseas through Aon Brokers to insurers in the London market.
The insurance account of the airline was shared as follow: Prestige Assurance leading with 8 per cent; Leadway Assurance with 7 per cent; NEM Insurance, 5 per cent; Sterling Assurance, 3 per cent; Continental Reinsurance 3 per cent; Aiico 2 per cent and Standard Alliance 2 per cent.
In November, about 40 families of the Victims of the crash petitioned the National Assembly for the failure of Dana to pay them the initial 30 per cent of the compensation as required by law. The House of Representatives later ruled that Dana’s operating licence be suspended till all claims are paid.
Launch of NIID
In the course of the year, the Nigerian Insurance Industry Database, NIID, was launched. The NIID is expected to serve as a vehicle for easy identification of genuine insurance documents by relevant authorised persons, monitor insurance transactions documents and reduce incidences of fraudulent insurance transactions.
Managing Director of Lasaco Assurance Plc, Mr. Olusola Ladipo-Ajayi said that the NIID provides verification that actually, what one is holding is what the law requires because the law requires that it is only registered insurance companies in Nigeria that can issue valid motor insurance certificate.
Commissioner for Insurance, Mr. Fola Daniel said that the NIID, would protect Nigerian governments, individuals and corporations from the dangerous activities of fraudsters racketeering fake insurance certificates.
“The NIID is of great benefit to all stakeholders in the insurance industry. These include but not limited to the various government at all levels, policyholders, shareholders of insurance firms and would be investors.”
Daniel said the database is an instrument that would become very handy in the control of or fight towards the eradication of fake insurances in Nigeria.
New NIA Chairman
In 2012, The Nigerian Insurers Association, NIA, got a new Chairman in the person of Remi Olowude, Managing Director/Executive Vice Chairman of Industrial & General Insurance Plc, IGI.
At his investiture, Olowude promised that the NIA will engage the Presidency and the National Assembly on the need to put up laws that will address the various challenges confronting the insurance industry.
NIA, according to Olowude, intends to initiate interactive sessions with the appropriate committees or organs of the two chambers of the National Assembly to discuss issues such as restrictive laws on insurance practice, multiple taxation, insurance awareness and penetration, development of oil and gas industry among other issues.
He disclosed that the NIA plans to meet with the presidency to discuss issues bordering on the key roles of the insurance industry in the transformation of the Nigerian economy.
He said, “The Governing Council will consider seeking an audience with the Presidency to table issues such as the key roles of insurance to the socio-economic growth and development of the nation; how the insurance industry and the Government can collaborate in areas of poverty alleviation; the need to give the industry the opportunity to contribute to the formulation of certain government policies; insurance industry representation in appropriate government committees; among others.
Appointment of consultant by the House of Representatives
Also in the course of the year, the House of Representatives appointed Rowland Madiebo as its consultant to assist the chambers on the review of federal government insurances.
Madiebo was unveiled at a meeting of the sub-committee on insurance and was described as a thoroughbred practitioner with over 39 years experience in the industry.
Abdulmuminu, Chairman of the House Committee on insurance said Madiebo would bring his untainted experience to bear on the committee’s work which is basically to make the insurance industry more responsive to the growth of the nation’s economy.
Mandate to brokers to normalise membership with NCRIB
In the course of the year, the National Insurance Commission, NAICOM, gave a marching order to all insurance brokers operating in the country to normalise their membership with the Nigerian Council of Registered Insurance Brokers, NCRIB, or face sanctions.
President of NCRIB, Mrs. Laide Osijo said that NAICOM gave the order as part of moves to remove charlatans from the insurance broking profession.
“In view of the need to affirm the provisions of the NCRIB Act on registration of insurance brokers and eliminate the existence of charlatans from the insurance broking profession, NAICOM formally forwarded a circular to all brokers operating with NAICOM licence but without NCRIB registration certificates to normalise their records with the Council, immediately,” Osijo said.
N1 trillion GPI
It will be recalled that NAICOM, had set a gross premium income target of N1 trillion by the end of year 2012 for the insurance industry. However, insurance have not been able to reach the target as the industry’s premium income still hovers around N250 billion.
According to Ganiyu Musa, Managing Director of Cornerstone Insurance Plc, were unable to achieve the set target because they continued to run after the same set of business year in year out, ignoring the Market Development and Restructuring Initiative, MDRI, of NAICOM which serves as a platform to reach the trillion naira mark.