By Onochie Ukeme

The broad objective of the national insurance commission (NAICOM) is to regulate the insurance industry to profitability.

How well the Nigeria insurance industry regulator has been able to carry on with this broad objective is the focus of this investigation.

In most economies of the world insurance plays a key role in economic development especially in the areas of financial intermediation and risk management.

This critical role could ensure smooth functioning of all other sectors of the economy and it’s capable of spurring economic growth through provision of investment fund to government and other productive sectors.

The industry requires adequate attention of all stakeholders for it to deliver this critical role.

NAICOM as the industry watchdog have over the years struggled with different regulatory strategies that could provide a pathway to the growth and profitability of the industry. As at today, these strategies have not succeeded in producing an industry capable of carrying out its functions. The industry has been characterised with withdrawals of operating licenses of underwriters, cancellation of brokers’ licences, litigations and damaging publications that have rather portrayed the industry in bad light.

Some of the companies operating in the industry as underwriters and brokers are running at a loss due to the harsh economic conditions that got worsened after the covid-19 pandemic. Most policyholders went with option of surrendering their policies by withdrawing their investment for consumption, the companies lost their investments to economic downturn resulting to huge claim deficits, high debt profile and months of outstanding staff salaries were some of the many challenges the industry had to cope with and at the same time trying to remain presentable to the market.

The recent onslaught, clamping and axing down of some operators by the regulator leading to the withdrawal of licenses of two big players and issuance of warning to yet another five big players  have been critiqued by industry watchers and insurance experts as a public outcry that is capable of further hurting and demarketing the industry.

Would the exit of these old players pave way for new entrants to reposition the industry?  How would the economy manage the looming job losses and its social cost? These are among the many questions bugging the minds of watchers.

Opinions reveal that NAICOM would have done better by quietly working with the underwriters to secure mergers and acquisitions. Experts are further advising the regulator to improve on its oversight capacity by employing more professionals, work towards solving the unethical practices within the industry such as issuance of fake insurance certificates by quarks who have taken over the third party insurance market, curb the habit of rate cutting by brokers and agents, stop underwriters from approving return premium and non remittance of premium, kick against recruitment of non professionals into higher hierarchies of the companies, broaden the investment spectrum of the industry and exercise their powers to remove erring chief executives. Corporate governance issues and structure of ownership of the insurance companies remains a major challenge to the industry.

Onochie Ukeme, Insurance Analyst