Breaking News

Tough regulations underline 2010 insurance guidelines

By Ifeanyi Ugwuadu
National Insurance Comission has released the 2010 insurance industry guidelines indicating tougher regulations and increased disclosures as well as more oversight by the industry regulator.

To underscore the bold initiative of government to ensure development and growth of the sub-sector and to forestall collapse, the just released guidelines affirmed the oversight functions of the regulator and that of the board of the companies.

But while prescribing accurate information and full disclosures, the industry regulator reviewed downwards the penalties of false returns and information from the 2009 fine of N.5million to N.1million. It is not clear yet why the commission sliced of 80% from the penalty.

For the first time, the insurance market regulator issued wide ranging policies on investment and now demanded a clear severance of insurance funds and shareholders’ funds.  Before now, it had been represented as one and the same thing in most companies’ books.

Obviously, modeling from the capital market crash scenario and the reported reckless investment of proceeds of public offers and private placements in non insurance related businesses, the Commission pegs such investment at 25% of the total proceeds from such offers.

It also placed a ban on insurance and reinsurance companies’ investment “in any company that either has not reported profits or paid dividend in the preceding three years.”

Interestingly, a new investment horizon appear to have been endorsed by the regulator. It says, “insurers and reinsurers may invest in bankers’ acceptance and commercial papers guaranteed by issuing bank.

Similar to the guidelines released in 2009, the 2010 regulations stresses strict compliance to multi-levels of reporting to the commission.  Offshore insurance and reinsurance permission, the position of the board and audit units are given emphasis for stricter compliance.

The appointment of the Chief executive of insurance companies is for the time included in the regulation whereby the commission, in accordance with Insurance Act 2003 shall give approval for such appointments   However, the guidelines is silent on the removal of CEO’s and does not prescribe the process for such removals.

“All insurers and reinsurers are reminded of the provisions of Section 81(2) of Insurance Act 2003 and Section 30(1a) of the National Insurance Commission Act 1997 that making false returns and/ or recklessly giving false information to the Commission attracts fine of N100,000”, the guideline stated  global economic crisis


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.