NAICOM Boss addresses House Committee on insurance and actuarial matters

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KEYNOTE ADDRESS BY THE Ag. COMMISSIONER FOR INSURANCE, Mr. O S. THOMAS AT THE RETREAT FOR MEMBERS OF THE HOUSE COMMITTEE ON INSURANCE AND ACTUARIAL MATTERS AT IBOM HOTEL, UYO ON FEBRUARY 22, 2020

Protocol,

I am delighted to address this gathering of Honourable Members of the House of Representatives Committee on Insurance and Actuarial Matters from the most respected Green Chamber of the National Assembly.

It is a great pleasure for me to welcome you to Uyo, Akwa Ibom State for this retreat meant to apprise members of the Committee on the workings of the insurance sector in Nigeria.

The Commission as a statutory regulatory agency derives its powers from the National Insurance Commission Act 1997 and the Insurance Act of 2003 to primarily oversight insurance practice in Nigeria. I believe this event provides me the opportunity to bring to your attention the fact that these laws in some of its provissions are fast becoming obsolete and thus require urgent amendments. It is imperative to note here that a bill to amend the Insurance laws has been in the works for some years now, we are however, optimistic that when the bill is eventually presented to the 9th Assembly, it will enjoy an accelerated attention.

The Chairman, members of this honourable Committee, by way of information, the Nigerian insurance sector consists of two major segments namely: the Underwriters (which comprise Insurance and Re-insurance companies) and, the intermediaries comprising Insurance Brokers, Loss Adjusters and Agents.

As at date, there are a total number of 55 insurance companies, (2) Re-insurance, (3) Takaful and (2) Microinsurance operators; over 500 insurance brokers and 2,000 Agents.

The Commission over the years in the course of discharging its duties and keeping to its mandate, had incepted a number of initiatives, especially in the area of market development to boost insurance penetration and growth. While a lot has been achieved by the Commission in this regards, there is a lot to be done if we must attain the desired goals as an industry.

While the industry is eagerly looking at a more positive outlook in the year 2020 and beyond, it may be necessary to have a peep into the performance of the industry in the last (3) three years especially in the areas of Claims payment, Gross Premium Income and Total Investments as depicted in the table below.

Insurance Industry Data 2017 – 2019

Year

Gross Premium (Nmn)

(%Increase)

Total Claims paid (Nmn) (%Increase)

Premium Retention (Nmn)

(%Increase)

Total Investment (Nmn)

(% of Assets)

2017

372,358.42 (14.5%)

186,443.23 (28%)

265,498.62 (11.44%)

700,791.46 (62.1%)

2018

426,210.93 (14.2%)

252,190.21 (35%)

315,495.87 (18.83%)

1,007,873.12 (75.8%)

2019*

490,994.99 (15.2%)

330,369.18 (31%)

376,071.08 (19.2%)

1,128,817.89 (71.9%)

NOTE: *2019 figures are provisional

The table above attempts to give clarifications especially to the vexed issue of non-payment of claims by insurance operators. There is no denying the fact that there are indeed some cases of delays in the payment of claims by some operators, the Commission is however, addressing such cases as soon as they are brought to our notice. It is for this reason that the Commission has strengthened its Complaint Bureau Unit in order to effectively address consumers’ complaints within the shortest possible time.

The Commission has also as a matter of deliberate policy adjusted its strategy to focus more on developmental issues than compliance issues going forward in the overall interest of all stakeholders. The foundation to ensure successful implementation of its initiatives in this regards its being layed.

Some of the initiatives of the Commission to drive its developmental agenda includes but not limited to:

✓ Recapitalization

✓ Financial Inclusion (Microinsurance & Takaful)

✓ Development of Agric Index Ins., Bancassurance & Retiree Life Annuity

✓ Implementation of Risk Based Supervision Implementation of IFRS 17

✓ Improving efficiency in the supervisory processes

✓ Capacity Building of the Commission and Market workforce

✓ Regional Integration of Insurance Supervision

As you may have been aware, the Commission had in 2019 initiated the process to recapitalise the insurance industry in order to upscale its financial standing to meet up with current economic realities and avoid imminent systemic collapse and solvency crisis in the insurance sector.

This will ensure that the industry becomes more robust in its technical competence and financial base, build confidence, trust and enhance market value. it is further aimed at repositioning the sector for self-actualization in terms of growth and development. The process is expected to be concluded by 31st December, 2020.

In 2009, the Commission launched the Market Development and Restructuring Initiative (MDRI) project aimed at a comprehensive pursuit of development of the industry as well as ensuring full compliance with extant Laws in respect of compulsory insurances. The first phase of the project was successfully carried out in all the six geo-political zones in the country.

The second phase of the MDRI project will soon be unveiled and it will mark out clear targets and tasks for all stakeholders in the industry. The Commission is committed to vigorously pursue the continued implementation of Compulsory Insurances to which collaboration and support from all stakeholders is key towards achieving the desired goal.

I must mention here that the Commission had hitherto been hindered in its various efforts to implement provisions of the current Laws by a number of challenges which are not within its control. We believe that going forward and in view of our renewed collaboration with the National Assembly, relevant security and sister agencies, enforcement of compliance with the laws will become much easier in no distant time.

The Annuity business is an aspect of life insurance that is gradually taking its shape in the market. In the recent time, Annuity has recorded significant boost with an increase in its contribution to the sector. The public is becoming more exposed and knowledgeable about the workings of Annuity, this we hope will continue in the coming years as the future is looking very bright. This has also shown a positive growth in trust and confidence in the sector.

The Commission is committed to ensuring adequate protection of policyholders as part of its core mandate. This effort has been taken in many fronts such as ensuring that genuine claims are promptly paid by insurers, ensuring financial soundness and viability of the insurers to protect investments, right prizing of insurance products, value for money, use of technology for ease of transaction etc.

As part of the Commission’s effort to develop the insurance market, it has commenced the process of attaining the full digitization of insurance business in Nigeria in order to keep tap with current realities. There is no hiding the fact in saying that the industry is currently lagging behind other financial services sectors in this regards.

The Commission is now more prepared to drive the IT revolution in the sector starting with itself. It is on this premise that NAICOM is working assiduously to see that all its operations are done online and real time by digitalising its processes and encouraging the industry to imbibe same. Appropriate steps are being taking to launch the Commission’s portal which will go a long way in blocking leakages in the sector.

I believe that this retreat and its takeaways will further enhance our harmonious working relationship with the Committee and, the National Assembly in general. The Commission indeed needs total support of the National Assembly to be able to untapped the full potentials of the industry which will in turn increase our contribution to the nation’s economy.

Once again I welcome you all to this retreat and wish us all successful deliberations.

Thank you.

1. S. Thomas​

Ag. Commissioner for Insurance