• Friday, May 24, 2024
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BusinessDay

Remi Olowude’s wishes for the insurance industry

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The last outing of Remi Olowude, the executive vice chairman of IGI, as the chairman of the Nigerian Insurers Association (NIA) was on 11th  March , 2014 at Eko Hotel and Suites being an interactive meeting between the Board of the National Insurance Commission (NAICOM) and the Nigerian Insurance Industry Operators. Olowude looking up to life with great optimism on that day before his death on 27th  September, 2014, in a brilliant presentation made his wishes for the industry.  Modestus Anaesoronye who was at that event brings in part highlights of his speech.

Let me start by thanking the Chairman, Members of the Governing Board and Management of the National Insurance Commission (NAICOM) for convening this very significant meeting. A forum such as this is crucial to the development of the insurance industry. This is because it provides a strong platform for the operators and the regulator to review processes and diagnose the challenges in the industry with a view to ensuring sustainable growth and development of the sector.

I will not bother you with details. The one thing to do in a dinner of this nature is to discuss the most sensitive issues. We shall draw the commission’s attention to issues that affect the stability and long term growth of the insurance industry…..

•The encroachment on insurance business by government agencies, which try to provide insurance protection to aviation passengers and public liability for nuclear risks.

The Federal Government in 2007 divested its interest in Insurance business when it sold NICON and Nigeria Re, on the understanding that such concerns are better managed by the private sector. But ironically, the same Government extracted workmen’s compensation insurance business and transferred it to NSITF as Employee Compensation Scheme.

In similar vein, the Federal Government split pension business between insurance industry and PFA’s, assigning the chunk of the business to PenCom and PFAs; while it also moved health insurance from the insurance industry to NHIS. It is an open secret that the NCAA, under the Ministry of Aviation, is planning to establish insurance fund for aviation passengers’ liability. All over the world, aviation passengers’ liability is subject to international conventions and the risks are covered by conventional insurance policies; Nigeria cannot be an exception. Similarly, the Nuclear Agency wants to establish fund for nuclear damage insurance, instead of seeking conventional Insurance cover for the risks which are covered in international insurance market.

• Government patronage of insurance services and the need for prompt payment of premium.

Government and its agencies have been paying lip service to the importance and benefits of insurance, without serious patronage and support. There is hardly sufficient budget provision for payment of insurance premium by government and its agencies. Therefore, when insurance services are patronized, payment of the premium becomes an issue, a clear negation of the provisions of the law on “No premium, No cover”. Some government parastatals or enterprises are funded without allocation for insurance. Many insurance policies contracted by the MDAs in the past were not renewed, thus leaving the assets exposed to risk, damage and losses without insurance protection.

•Restriction on insurance investments and recognition of offshore investments.

There is urgent need to review the current restriction on investment to ensure safe but adequate returns to stakeholders for the viability of the industry. Investments on equities suffered losses in 2008 and 2009, yet insurers are expected to maintain the same proportionate level of investment in prescribed sectors. There is need to amend the provisions of Insurance Act 2003 and Regulation of insurance company investments in line with the realities of business. Mr. Chairman Sir, NAICOM needs to review its position on off-shore investment for the purpose of solvency calculation and actuarial valuation which we have started discussing with the commissioner and his team.

•Insurance of oil and gas imports

There is need to activate the various laws relating to Marine Insurance of refined petroleum products imported into the country. The Insurance Act 2003, for instance, provides that all imports into the country must be insured with an insurance company registered in Nigeria. This law is only observed in the breach. Consequently, we are seeking enforcement of the Cabotage Act 2003, review of the Insurance Act 2003 and the Nigerian Oil Industry Content Development Act 2010.

  Enforcement of compulsory insurances.

We are all aware that compliance with pension-related insurances and employee compensation has become imperative for bidding for public sector contracts, including insurance, but compulsory third party motor insurances are not considered as a condition for any contracts. The essence of compulsory insurances is to ensure that innocent victims of accidents and disasters are fully compensated, and to minimize economic waste in the society. Compulsory insurances include: Motor vehicle (third party) insurance; Insurance of all public buildings; Insurance of buildings under construction; Insurance of all marine imports into the country.

•We have also observed the gradual dominance of foreign investors in the Nigerian insurance market. Although Direct Foreign Investment (DFI) is in the overall interest of the economy, we want to believe that the foreign investors are not placed at an advantage over their Nigerian counterparts. We welcome foreign investors provided that there is a level playing field for all and sundry.

Other critical issues that are of great concern to operators include:

• Bailout of insurance companies that lost substantial volume of their assets as a result of financial meltdown and crash of stock market.

•Amendment of Companies Income Tax (Amendment) Act 2007 with a view to correcting the absurdities in the Provisions which made the statutes inimical to the growth and development of insurance industry in the country.

• Multiple taxation of insurance companies by different tiers of government.

• The need for Federal Government to support the quest for accelerated insurance penetration and density in Nigeria through micro insurance and takaful insurance.

• Contribution of insurance professionals and experts into relevant government policy decisions.

•Appointment of insurance professionals and experts into governing boards of companies, parastatals and agencies where risk management considerations are relevant.

•Return of the  statutory deposits made by insurance companies to CBN

•Co-operation between the NIA and NAICOM’s Customer Complaints Bureau.

Modestus Anaesoronye