Shareholders decry heavy monetary fine on underwriting firms

Shareholders of insurance firms across the country are unhappy that their companies continue to pay monetary fines running into several millions of Naira, on a yearly basis, to the regulators for violating account submission deadline or other infractions, even, when it is obvious the affected companies have yet to declare dividend in a long time.

The shareholders, who expressed their grievances at the Annual General Meetings (AGMs) of the few underwriting firms that had so far held their AGM, were unhappy that their companies had to cough out several millions of Naira as monetary fines to the regulators, thus, clipping the wings of the companies to pay meaningful dividend or bonus to shareholders, while some had their accounts in negative as a result of the huge fines.

Nigerian Stock Exchange (NSE) had set 31st of March as the deadline date for listed entities to submit their financial statements of the previous year, while failure to comply attracts monetary fines until the affected firm is able to submit the account.

In the same vein, insurance companies are given till 30th of June by National Insurance Commission (NAICOM) to submit their accounts, failure to which attracts N5,000 each day after the deadline until the concerned firm submit the financial report to it for approval.

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Over time, underwriting firms find it difficult to comply with these deadlines, hence, were made to pay monetary fines, until they were able to comply.

In 2014, 21 underwriting firms paid 60 million fines to NSE for failure to submit their 2013 financial accounts to the regulatory body on or before 31st March. This doesn’t include the fines, running into several millions of Naira, paid to NAICOM as well.

In 2015 as well, about 21 insurance firms paid N39.9 million fines to NSE for late submission of their 2013 and 2014 accounts, which rose above N45 million, when the fines being paid by erring underwriting firms to NAICOM for the same offense, is added.

In the current year, (2016), a data sourced from the X-Compliant Report on the NSE website in May 2016, revealed that 13 underwriting firms in the country have paid N33 million fines to NSE for failure to submit their 2013, 2014 and 2015 financial accounts to the regulatory body on or before 31st March.

Some shareholders, alleged that NAICOM, on most occasions, deliberately delays the approval of accounts in order to charge insurers.

The shareholders, however, called on the concerned underwriting firms, to work closely with the Nigerian Insurers Association (NIA) to make their grievances known to these regulators.

Mr. Robert Igwe, a shareholder said regulators, especially, NAICOM, should try to be considerate in meting out punishment to insurance companies, noting that the current regime of sanctions is depriving insurance companies of income to pay the shareholders dividend or bonus.

Operators, through NIA, he said, should try to comply with regulations to avoid sanctions, stating that insurers should liaise with regulatory authorities, to so see whether waivers could be granted to them, should in case there is tangible reason for late submission of accounts.

Mr. Akinsanya Sunday Solomon, another shareholder said the regulators ought to take into consideration the challenges of insurance industry and try to have mercy on players in that sector.

National Chairman of the Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie, was unhappy about the low level of insurance penetration in the country and its contribution to the Gross Domestic Product (GDP), stating that this has accounted for the below par value at which most of the listed insurance stocks are being sold on the NSE. He charged NAICOM to avoid over-regulating the sector.

The shareholders, he pointed out, requires return-on-investment and performance, charging the leadership of NAICOM to change some ridiculous rules that are not friendly to the shareholders in the industry.

Other shareholders, such as Micheal Cole, Kola Alaga, Chief Timothy Afolayan, among others, equally shared the same sentiment, believing, the sanctions are becoming too much and robbing shareholders, who have invested so much in the companies, of profit.

NAICOM had earlier said it bear no grudge against any company, provided such firm operated in accordance with the stipulated guideline.

The commission said it has no reason to delay a properly prepared account, stating that the regulatory body is quick in approving such account. The reason for delay in approval of some accounts, according to the regulator, was because there were infractions and errors that need to be corrected before such accounts are approved.

The immediate past Chairman, NIA, Mr. Godwin Wiggle, stressed that the association is trying to persuade its member insurance companies to submit their accounts on time to the regulators to avoid paying huge monetary fines that could have made a lot of impact on their balance sheets, although, he noted that the rate of compliance is on the increase.