By Favour Nnabugwu

Labeled as a toothless bull dog that could only bark but could not bite, the National Insurance Commission, NAICOM is steaming hot to deal with any insurance company or broking firms that dare to break the rules of the regulatory body.

The commission had threaded softly in recent times in order to protect the confidence the general public reposed in the sector but the regulatory body has come to realise that there has been gross abuse of its softness by the same operators which it earnestly sought to shield.

NAICOM has, however, changed its mode of supervision from flexible to spongy regulation since the operators the commission was defending from lost of public confidence branded it a toothless bull dog.

Commissioner for Insurance, Mr Fola Daniel, wielded the sledge hammer when it suspended the license of three insurance companies weeks back.

Vested with NAICOM Act of 1997 and Insurance Act of 2003, NAICOM is fully armed with the power to prosecute criminal insurance operators and other insurance offenders that violate any section of the laws regulating the sector.

Daniel had, in Calabar, recently, revealed that the commission had a meeting with Nigerian Insurers Association, NIA, where NAICOM made it clear to operators that it would no longer tolerate or cover up aberrations from any insurance company.

”We have witnessed some measure of impunity by our colleagues; we applied drastic measures on this issue, and we are not relenting in our efforts for the operators to toe the path of professionalism. We are here to protect the interest of all stakeholders; we will no longer tolerate this act in the market,” he said.

He said, “There are challenges in the business environment and the market, and for any company to survive in the system, the company must be strong, efficient with arrays of products to meet the needs of consumers.”

The commission had among other issues discovered accounting fraud in insurance companies’ annual reports. The commission also found out that most insurance companies failed to disclose their gross premium earned, reinsurance premium incurred, gross claims incurred and gross claims outstanding whilst underwriters commit a lot of errors in their computations of solvency margin worsen by poor interpretation of the Insurance Act 2003 to mention but a few.

This lack of adequate financial disclosure by insurance companies has caused NAICOM, in time past, delays in approval of insurance accounts and at one point in time caused companies to cancel their Annual General Meetings (AGMs) over its refusal to grant approvals to companies’ accounts.

He stated, “I had a meeting with NIA; the first meeting was in January and in that meeting, we did tell them that we were very sorry for being soft with operators which aroused criticism, but we have now repented because if one applied one medicine and discovered that the medicine was no longer working then a higher dose would need to be applied.”

”We said to them that for offences operators have committed for which we had admonished them and there had not been any remorse or change, we will henceforth impose sanctions on offenders and we have no apology whatsoever for any sanction meted out.”

For instance, he enunciated, “If there are disparities in the quarterly account companies sent to us and the commission passed a company’s account without thoroughly looking at the accounts, NAICOM can be criminally liable for such recklessness.”

For that, “There are lots of aberrations going on in the sector though not as bad as the earlier ones. We need to be very careful as regulators. We now have financial reporting councils that sit on top of account of all companies. So, if we pass an account that we shouldn’t have passed and is revealed by financial reporting council, as regulator, we are going to be deeply embarrassed. So, we are not going to give subsidy to any company that hastily approves any account.”

For proper understanding and interpretation by users, NAICOM’s circular to companies directed that, Insurance and reinsurance companies should disclose the accounting policies in reporting gross premium earned, including basis for determination of unexpired risk; Reinsurance premium cost including basis of accounting for proportional and non-proportional elements and determination of prepaid reinsurance premiums; Claims cost incurred including basis of accounting for salvage recoveries, subrogation rights and reinsurance recoveries as well as reinsurer’s share of outstanding claims and acquisition cost including the basis for deferral of acquisition cost in their annual accounts and reports.