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NAICOM may increase fines to sanitise insurance sector – Daniel

By Rosemary Onuoha

NAICOM is strategising on how to effectively deal with insurance operators that are bent on doing business unprofessionally. In this interview, Commissioner for Insurance, Mr. Fola Daniel speaks on this and other issues, excerpts.

WHAT is NAICOM doing  to ensure that there are reduced complaints from the general public?

The target of the National Insurance Commission, NAICOM, is to ensure that we receive fewer complaints from the public against non settlement of claims. That is the reason why we set up a claimant centre that enables claimants to directly phone in to us.

insurance-pixDue to this, claimants don’t need to write us. They just have to give us details of their claims and within 48 hours we will be able to give them feedback. That action endeared us to the general public and we got a lot of accolades.

Last year we succeeded in resolving a lot of claims that were subjects of arguments between insurance institutions and claimants and a good number of them sent us written letters of appreciation.

Why is the issue of overriding commission still prevalent in the insurance sector?

The issue of overriding commission is like the Ten Commandments God gave to mankind, in the sense that, no matter how hard one preaches, there are people who will still want to break the laws. We are experiencing same in the insurance industry but be assured that we are deterring operators from breaking the rule on overriding commission. One of the things you hear operators say is that NAICOM is just pilling up penalties on them. In one of the meetings I had with them I said, ‘though we have been slamming you with penalties but it has not stopped you from misbehaving.’ Since NAICOM became a regulator, it has never fined any insurance company up to the tune of N10 million, but last year, a company paid N62 million as fine. As operators are becoming hardened, we are also re-strategising on how to effectively deal with them. So, insurance companies may be complaining of being fined N500, 000 or N200, 000 now, we have promised them that they could get up to N5 million, N10 million or even multiple of that as fines so much that some managing directors could lose their jobs.

Incessant inspection

If I am a shareholder and you make me pay N200 million to a regulator as fine and not tax, then there will be trouble. If any company misbehaves to such an extent that it became castrated that it cannot pay claims, to whose interest?

Another major complaint we received from the industry last year was incessant inspection of their books because some significant companies were inspected up to six times and this is because we want to know exactly what they are doing. If we see an expenditure of N5million at a time you got big business, we interrogate to know what you might have done with the money and we will want to know the recipient. We are doing our best to ensure we give the best to all our stakeholders.

To what extent is the insurance sector meeting up with claims to Boko Haram victims?

Insurance fund is not a compensation fund.  It is not Father Christmas money to be shared when something happens, rather insurance fund is an indemnity fund, and you can only be indemnified if prior to the event you have been insured and has paid your premium.

Insurance policies

Unfortunately we have lost brothers and sisters to Boko Haram attacks, however, the military men that had insurance policies will be compensated. We have lost members of the armed forces and policemen to the insurgency but all of them have been paid.

Insurance companies have been paying these claims and it is creating holes in the pockets of the insurance companies because we have lost a lot of soldiers. Though money paid as premium is very small in relation to their cover, but be assured that as long as they are insured, insurance companies are meeting their obligations. Unfortunately, the Boko Haram victims do not have insurance.

What are the major challenges confronting the insurance sector?

The biggest challenges to the insurance industry today remain two things and they are trust and awareness. As regards to trust, if the public don’t trust the insurance institutions, the people will be reluctant to buy whatever the institutions offer them and this is a serious problem.

On awareness; a colleague told me that when they went to Ibadan during the awareness on Market Development and Restructuring Initiative, MDRI, they went to a particular factory owned by an Indian. They wanted him to show evidence of taking insurance, he went into a whole lot of argument but by the time they calmed him down and explained the benefits to him, he was instantly ready to buy the policy.

So, basically, the problem is awareness because if he was aware, there wouldn’t have been any argument because Indians like to protect their property, in fact, the Indians are capitalists.

So, awareness and lack of trust still remain the biggest challenges facing insurance industry today. Meanwhile, NAICOM is still stepping up efforts to address these challenges.


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