Mr Sunday Olorundare   Thomas, the new Director-general of Nigerian Insurers Association (NIA) in this interview with Financial Vanguard clears a whole lot of misconception about the association and what it stands for.

Sunday Olorundare Thomas

Thomas who is less than three months in office as the NIA D-G is already baring  the fangs of the National Insurance Commission (NAICOM) and this is sending cold shivers down the spines of the association’s member companies but says he is going to use persuasion to bring about changes in the body. He also spoke on industry issues including market agreement, Employer Compensation Bill etc. Excerpts:

What is your agenda for NIA as Director-General?
Essentially, my agenda is to move the entire NIA forward and make it better than I met it.
My predecessor, Mr Ezekiel Chiejina did his best having taken the association thus far. The least I can do is to move NIA to the next level. The next level is to bring NIA’s activities into prominence much more than it was. And bringing an association of this repute into prominence is not just by any illusion of some sort because it is going to be very tasking.

Definitely, there are certain things that the NIA must do, including proposing policies that will resuscitate some things which had not been closely looked at in time past. By the grace of God, the association and its members will move forward.

What message do you have for NIA member-companies which you had ‘regulated’ at the National Insurance Commission (NAICOM) while there?

Honestly, I’m not aware that operators feel uncomfortable when they hear my name. But one thing that is constant is that the truth must be told at all times. And that is not going to change. Some people have jokingly discussed with me, asking how I feel about my coming to NIA, and I said to them, ‘well, from where I came from, I had the force of the law but here, I will have to use the force of moral persuasion to get things done. But the bottom-line is that we must get things done.  Even when I was in NAICOM,  it was not always a matter of law. We give listening hear to operators so they cannot say it was law all the way.

This industry is not as bad as people think. One thing I noticed is the fact that people are ready to change, they are ready in so far they are convinced that the change is going to bring about a forward movement, so, it is not a case of position changing now. As far as I’m concerned, this is still a regulatory body, it is just that it is a self-regulatory body, and when you deal with a self-regulatory institution, you need instruments that are more powerful than the law to get things done and the instruments are persuasion and conviction. And to also let the people know that there are lots of things that they stand to benefit by following the line of good reasoning, and I know, going by the caliber of people that I’m managing, that member-companies are ready to take positions that will move their business forward, and as well as increase their bottom-line.

What is the association’s current position on the Employee Compensation Bill (ECB) now before the National Assembly?

The Bill has gone through public hearing. We attended the public hearing; I was at the House of Representatives and Senate public hearing. The fact is that the review of workmen compensation per se is designed to enhance the compensation of victims of work place accident. That, to me, is fantastic, the NIA welcomes it, the operators and everybody welcome it.

What we are saying is that the management of workmen compensation is the pre-occupation of insurance sector.  But as the Bill is, it is domiciling it with the Nigerian Social Insurance Trust Fund (NSITF) and this is the crux of the matter, and we are saying no, give us places in other jurisdictions where this is practised.

The association is ready to support the NSITF to carry out a monitoring role, to make sure that work place accidents are enforced.  That is, you take policies that will ensure compensation for work place accident but the management of that compensation itself should be in the domain of insurance sector. We made our presentation to the House of Representatives and the same to the Senate and l think somebody should listen to us. We are not saying NSITF should not come near, no. In fact, they have a role to play to the extent that the Ministry of Labour which is the parent ministry for NSITF has responsibility as part of its primary role of ensuring safety in a work place.

The NIA and its members are saying that we are ready to contribute to financing that responsibility from the premium of workmen compensation to make it more effective, and most importantly, because people have alluded to the fact that the 1987 Act which has become 2004 Act has not even been effective.

A provision of that Act is the fact that a regulation should be put in place by the Ministry of Labour which will make it mandatory, but up till now, the NIA and its members put in place a draft regulation to ease their job in 2005.

It was sent to the then Minister of Labour who did not do anything about it. So you can imagine what will happen if pension contribution is not compulsory; we will not be talking of N1.7trillion, we will not be talking about that because people will naturally find it difficult to want to go into areas because of suspicion of taxation and the rest of them even though it is for their benefit, but they will not immediately see the benefit in it, they will just see it as another levy.  I can tell that if workmen compensation had been made compulsory since 1987, like National Health Insurance Scheme (NHIS),  we will not be talking about the workmen compensation the way it is today.
How is NIA handling the rancour on NNPC and FG’s Group life Assurance accounts?

I guessed the rancour you are referring to is the 2009 cover which has not been probably insured or which members don’t want to be part of.  To me, the entire Group life needs to be actually looked at. I happened to be part of the committee that was looking at that before I left NAICOM. We proposed some rates then which  had become history, some other things have happened subsequently.  I believe that the largest Group life as I was made to understand, is a scheme in America.

It has about four million members and the premium rate is higher than what we have in this market. If we have that and we are talking of robustness of the market, if you look at America, it has the highest standard of living which means the possibility of death is higher here than America.. It also means that the chances of claims are higher in Nigeria than America.

What I have seen here is that some of the factors taken into consideration in rating Group life seemed to have been ignored. Right now, there are issues, even with the rates. I think this will be sorted out at the renewal stage.
The 2010 rate had been renewed, but we want to see how it comes out.

For 2009, I was made to understand that the government decided to self-insured for those period, though if the law says it is mandatory, I believe that somebody should respect that part of the law that makes it mandatory.  So, talk of self-insurance, I don’t think it will be in conformity with the provisions of the law because Section 9 (3) makes it mandatory for people employing five people and above to be insured.

So, if the government has problem insuring for a particular year, it becomes an issue.  This is what one has to look at again.
I cannot see the issue of self-insurance within the framework of the pension Act 2004. I think the rancour will sort itself out when the reality manifests.

NIA members contributed N1 million each to an agent in Abuja for media campaign on the ECB.  What is your reaction to that?

I think there is a mix-up there, one of the primary objectives of NIA is to promote the interest of its members and the business of its members and creating awareness is a pre-occupation of this association. The N1 million contributed by members had been misconstrued. I read in some newspapers that the money was meant for workmen compensation. It is not meant for that. It was meant for public awareness and of course, if we need to carry out campaign for workmen compensation, why not? Look at the issue of Nigerian National Petroleum Corporation (NNPC), it was not Workmen Compensation. We did publications, it was part of the contributions made by members of this association, and we are going to do more of that because there are things that the public need to know about the activities of this market.

What is NIA doing about the erosion of some of its members’ capitals?
When you talk about erosion of capital, you must be sure of what you are talking about.  For the fact that a company is insolvent doesn’t mean its capital is eroded. If management of a company’s asset is not properly done, it can run into insolvency.

So, it doesn’t mean that the capital is totally eroded. What I’m saying in essence is that if I were to be in the commission and have the responsibility for analysing the accounts, I will be able to tell you that it is true that some companies are insolvent or no, they are not in insolvent. But I’m just telling you that this is not a situation where one can be guessing. You must come with facts.

For a company to go into insolvency, there are a lot of things and stages that must take place.  So, it is not something you can just say off hand that a company is insolvent.  I wish we do not go into such area because there are a lot of things involved before you can declare a company as insolvent.
What informed the decision of NIA to replace vehicle stickers with central insurance data system, and when will it be?

Let me first of all let you know that the first initiative of codifying documentation in respect of Motor is an initiative of the regulator which had problems along the line.  Now, the regulator said it is no longer interested in how it is done, but it is interested in getting it done. The NIA has taken the challenge and as a result of that, there has been deliberation on it for a while on putting in place a sustainable system, an endurable and robust system that can, first of all, deal with leakages that we have in the market right now.

We have a lot of leakages. We are carrying out an exercise and by the time we finish, we are actually going to get somewhere as to the position of insurance in relation to Motor vehicle in Nigeria.  We are working on something. But to continue with the issues you raised, we believe that the codification by way of going e-electronically is something that can deal with issues of fake insurance and fake institutions. You know that if you go to some part of the country, they will still give you motor cover for Sun Insurance, Veritas etc. We still have them all over the place, and then you start to wonder how they come about it.

Nigeria is a large nation. It is difficult to comb all the nooks and crannies of the nation. I guess the law enforcement agents are trying their best. But we are trying to evolve a system that will eradicate the issue of fake insurance document not only for motor, we are also looking at marine because these two products are very critical and I think we have gone very far in this, and before this year runs out, we should be able to put in place a system that is sustainable, robust and quite durable.
What is your position on the NIA market agreement?

Well, you must not forget the fact that the establishment of market agreement was informed by a particular situation, and the situation was the fact that as the time the market agreement was reached and the way businesses were done, if it should continue, it will not be in the sustainable interest of members of the association and for that, we said hey, let us call ourselves to order, let us think of ways and means of improving the market hence the market agreement. If you look closely at the content of the market agreement, people tend to focus only on pricing, it is much more than pricing,. it is about evolving policies and conduct.

We operate ethically in a manner that is going to bring us into the fore, and not just situations of castigations or saying negative things about the market. How do we develop a kind of system that is going to be sustainable, profitable and that is going to make shareholders want to continue to invest in our market and make our customers happy and also can tell others? These are the things that are contained in the market agreement. It is not just about pricing as people tend to think.

As far as I’m concerned, I think to a large extent it has its flaws here and there, just like any other instrument. It is an instrument for a self-regulatory organisation, just as we have laws for the statutory institutions. I think those things can be ratified as it is being implemented. And of course, members are already looking at the possibility of reviewing it so that whatever gap that exists can quickly be amended.  But its existence is welcome, and people have been doing their very best trying to align with the agreement.

How far has NIA gone on its search for a legal practitioner to man its complaint bureau?
To me, it is a decision well taken.

The association has been conceptualizing this for a while and what informed it is that we want to complement the efforts of the commission in this area, and as a Self- Regulatory Organisation (SRO), one of the key requirements of an effective SRO is self-monitoring.  You look at issues that relate to your activities and you want to manage it within yourself.

I think that is what has led to that. Of course, you know that an institution of this caliber requires somebody who has the technical know-how in terms of adjudication, the kind of person that will be respected in the society, who has what it takes to sit at that level and manage the situations involved in a complaint bureau, but I guess we are very close to getting it established.

We want to relieve the commission of some of those problems and tell the insured that if they have complaints, they should freely tell us about our members and we will deal with it. And once a decision is taken, it is binding on all our members but if it is a decision that is not acceptable to the insured, the insured is still free to go to the commission or even go to court.  However, the association’s complaint bureau will minimise such cases. We will deal with it in accordance with insurance principles. Insurance is a global business hence we are not going to bend backwards unnecessarily to accommodate false claims.

But once it is decided that it is a genuine claim, our members will have to pay such claims. That is the whole purpose of the bureau. We want to be self-regulatory indeed, and not just in words.

NIA had been weak in disciplining member-companies that flouted industry market agreement.  Should we expect a change during your tenure?

That may not be right, to say that the association is too weak. This is an association of people who have willingly joined the NIA. There is nowhere in the law that made it mandatory for people to be members of this association. However, if you have chosen to be a member of the association, you must abide by its rules. A rule is in place, the market agreement is less than one year. So, we cannot start to measure whether people have been punished or not.

I think first and foremost, let us see the extent to which the gaps in the law can be aligned to practice.  We are bench-marking out market practice with global practices, and if in the course of implementing the market agreement, a company runs foul of it, be sure we will deal with the company because part of the market agreement is that if anybody runs foul of the content, the person will be penalized, and I can tell you that for us at NIA, if any company should run foul of the law, of course, we will do our best to do what the market said we should do.

One of your member-companies, Investment & Allied Insurance, has been taken over by Access Bank. What is NIA doing about it?

When you look at the balance sheet of an insurance company, you have trade creditors. Those are the ones that resulted from the purpose for which you were registered. There are those that may evolve from other transactions, I have not gotten the details of why Access Bank intervened in their operations. I guess NAICOM in its capacity as the apex regulatory body, will have the details and must have been dealing with it by now. To me, what we have been preaching to members is that we conduct our affairs in such a manner to increase the bottom line of the shareholders.

As far as the issue is concerned, when I have more facts, I will be able to deal with that. But the extent to which I know will not permit me to make an uninformed opinion.