Bill to create parallel regulator for insurers lands in stormy waters

The decision of insurance brokers to self-regulate,  creating a parallel regulator in the sub-sector, is causing cracks in the industry.

The move which has run into stormy waters, is pitting members of the Nigerian Council of Registered Insurance Brokers (NCRIB) against the current governing council of the market association and is pressuring its president, Ayodapo Soderu, to save his position.

This issue, BusinessDay learnt, will top the agenda at the next meeting of the Insurance Industry Consultative Council (IICC) of which the NCRIB is a member. The meeting is scheduled to hold in Lagos, on Wednesday 19, November.

The brokers, under the umbrella of the NCRIB, are pushing for an act in the National Assembly to create an Institute of Chartered Insurance Brokers, and transform it from its current status as a market association, to a regulator.

The Bill, SB 507 was enrolled in the Senate on 26 June this year, and has passed through second reading in the chamber. It is a private bill being sponsored by Gbenga Kaka from Ogun state.

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The brokers state their aim in section 2 of the Bill, which experts say is tantamount to running parallel to the industry regulator, the National Insurance Commission (NAICOM) and the educational arm of the industry, the Chartered Insurance Institute of Nigeria (CIIN). These two bodies are  creations of an act of parliament.

Section 2 of the Bill stipulates the duties of the institute when it is finally created, to include establishing and maintaining a central organisation for all insurance brokers, and “enrolling persons as chartered insurance brokers.”

Others are “register insurance broking body corporate,” and also to secure in accordance with the provision of this act, the establishment and maintenance of a register of chartered insurance brokers, containing the names, addresses and qualifications and such other particulars as may be prescribed, of all persons who having applied in the prescribed manner, are entitled under the provisions or this act to be registered, and the publication from time to time, of the lists of this persons.”

The institute when created, will further seek “to encourage the dissemination of knowledge, education practical training and research into the profession, establish and maintain a library” and also arbitrate or settle dispute or questions between members and other parties.

“While it will discipline its erring members, the institute will also do such things from time to time, aimed at elevating the status of the chartered insurance brokers and the protection of their interests and procure their general efficiency and proper professional conduct.”

What appears to be a death knell for the anticipated act was at the 21 October Annual General Meeting of the NCRIB in Abuja, where its members condemned the decision of its governing council to transform to a regulator.

A governing council member told BusinessDay, that the Bill was kept away from its members who only learnt of it when others like the Nigerian Insurers Association NIA and the CIIN opposed it.

“We have decided to stay action on it for now. A lot of our members felt that they were not adequately carried along, and besides, some aspects of the Bill were shrouded in secrecy and are also to push the interests of a few of the governing council members.

“Only the council knew of the bill and it is now a problem in the industry. It has become a problem even for the brokers’ president, Ayodapo Soderu ,who has just escaped impeachment over the issue”.

“The Bill is dead on arrival and the NCRIB has agreed to withdraw it” he said.

Laide Osijo, a past president of the NCRIB, said the association is still debating on the Bill, to avoid crisis in the industry.

“We are still discussing it because we don’t want controversy with anybody in the industry. The past presidents have intervened and we are deliberating”.

Further findings show that the CIIN has sought the withdrawal of the Bill in a protest letter to both the Senate president, David Mark, and the NCRIB, the initiator of the Bill.

In a 28 October letter from the CIIN to Mark, the Senate president was informed that transforming a market association to a regulator is inconsistent with practices in other known jurisdictions and would create conflict of laws.

The letter signed by its president, Bola Temowo states that “all the activities that are intended by the bill are currently being performed by the CIIN for the entire industry”. He also opposed the Bill, saying it would be in conflict with the powers of NAICOM to register or license and regulate the conduct of operators in the industry. 

“The proposed Bill is unconventional in the comity of global insurance professional bodies, it is capable of introducing double standard and engendering dissent and division in the insurance sector of the nation’s financial system”, Temowo said.

The CIIN also expressed disappointment to the NCRIB in another letter dated 21 October and signed by Temowo, its president.

“We note with displeasure, the intent of the NCRIB in seeking what is tantamount to the dismemberment of the singular professional body that is the CIIN which Decree 22 of 1993 assigned the responsibility to determine the standard of skill and knowledge for insurance practitioners in Nigeria, including insurance brokers.

“The quest by the NCRIB for a second chartered body within the insurance industry is not only in bad taste, but also unconventional”.

He cited the United Kingdom, which the Nigerian industry is modeled after, and Australia, as having no such parallel body.

The NCRIB’s current status is comparable to the British Insurance Brokers Association (BIBA) which still remains a trade association despite its merger in November 2011 with the Institute of Insurance Brokers (IIB).

In Malaysia, Ireland and Canada, brokers also operate as mere trade associations and not regulators.

BADEJO ADEMUYIWA