Uche Usim, Abuja
Mohammed Kari, the Commissioner for Insurance and chief executive, National Insurance Commission (NAICOM), is poised to carry out major reforms aimed at taking the industry to the next level. To achieve that goal, he believes NAICOM as a regulatory body, has elevated the operational standards in conformity with international best practices. He also said the Commission was partnering with relevant government and private sector players to deliver quality services to consumers.
Kari, while speaking at a recent insurance forum in Abuja, gave assurance that market stability, efficiency and transparency would remain the guiding principles of the Commission under his watch.
He speaks more about NAICOM.
Excerpts:
Reforms
We are carrying out some reforms and these reforms will not stop but continue. We shall continue to introduce new reforms and initiatives in line with international best practices in our march towards achieving our full potential. As we all already know, insurance in Nigeria has under-performed the banking sector and even the recently established pensions sector. For us, as the industry regulator and supervisor, we have chosen to elevate the regulatory ladder. We cannot, therefore, over-emphasise the paramount importance for us to fashion a development plan for the repositioning of the sector.
We believe that once we can successfully navigate this corner, we would be on our way to entrenching a financially solid, vibrant, viable and active insurance sector that would bring about not only an increase in penetration but also the industry’s contribution to GDP, accumulation of long-term funds for infrastructural financing, job creation and an improved standard of living.
It is long overdue that we make a change in the right direction. Successful economies are characterised by a strong investment culture of which the insurance industry plays a vital role. So, we literally need to re-energise the insurance industry and commence playing our key role in boosting and growing our sector and the Nigerian economy.
The Insurers’ Committee, fashioned after the Bankers Committee concept, is to create a platform for the highest echelon of the insurance industry, that is the top management of NAICOM being the regulator and the Chief Executives Officers of insurance companies to dialogue on issues, challenges and proffer solutions for the way forward for the development of the insurance sector in Nigeria.
The committee affords the practitioners the opportunity to reach certain decisions on the spot without having to defer to a superior authority just as it creates the avenue that enables them to walk on the same path and speak with one voice towards developing advocacy and interventions for the reshaping of the insurance system to meet the expectations of stakeholders.
Nonchalance
We are at times, faced with nonchalant attitude of some chief executives of insurance companies towards attending meetings. One would, therefore, expect that attendance at meetings and retreats of the committee will be an imperative and not an option for all members.
It is sad to note that this is not the case. Even when notices for meetings and this particular retreat were given well in advance, some CEOs still find reasons not to be in attendance, preferring instead to send representatives who would neither have the voice nor the mandate to either accept or disagree with a decision but only to report back to the CEO a narrative of what might have transpired. This is unacceptable.
Henceforth, the commission shall not admit a representative of a CEO into any meeting or event called by it for CEOs only. You are either with us or absent and against us. For the avoidance of doubt, the commission is sufficiently busy in the office and could effectively regulate the industry from its offices without these interactions. We feel the need to involve the regulated in policy and initiative of the industry.
insurance apathy
Nigerians don’t consider their assets worth protecting and those that have assets worth protecting are not giving it a priority and that is why the law provides some level of compulsion where the protection of third party is essential. And in this case, they still don’t insure them for lack of enforcement. There are two sides to any purchase; there is a buyer and a seller. If the buyer needs it, he does not need to be told. He should go and look for it. Insurance is a service you buy once in a while. It is unlike banking where you may need the services everyday. For insurance, the sellers have a role to play in exposing their products and services. But if the buyer is not interested to buy, you cannot make him buy. You cannot force him to buy either. That is why we believe that if we can enforce the insurance law, where there are protection for the third party, which are made compulsory by government, Nigerians will begin to understand the benefits of insurance.
It will elevate your financial hardship if you happen to have a problem with your assets or liabilities. The insurance public in Nigeria have always been kind of laid back towards protection of assets, possibly the way they acquired the assets or the value they put to the assets. If they don’t have any economic value in the asset they buy, then they could buy it from income that is not a normal income.
Policy
Policy issue has to do with enforcement and enforcement starts from the government to the individual consumer. Government has public assets that ought to be protected. And they established the National Regulatory Commission to ensure, among other things, that those assets are protected. Now, if government does not protect these public assets, I think it is a minus in the responsibility in holding public offices. But you find public officers in government who don’t care about protecting those assets. And in our role as regulators, we don’t only regulate the assets, we also seize. We ensure the insurance of public assets, and that it is done properly. So, if we talk to government and they don’t insure, then it would be the failure of enforcement. You can imagine if government as an institution does not insure, it would be difficult to insure the individuals in government or individual not in government.
By the nature of our regulation, we regulate the players in the industry. We also attend to complaints from consumers. And with those complaints, we do our survey to find out their satisfaction level with services being provided to them. But we believe that this interaction section will bring us together to hear from them how they want services to be provided for them better and how the services being provided can be improved upon or what is lacking in the services provided.
As you are aware, government has issued the ease of doing business policy and we believe this should filter down to all segments, which is not only the public services but also in the consumer and the insured segment. The consumer has the right to do business easily and to have services provided for him with ease.
Laws
There are several laws. For instance, the law requires any owner of a public building to insure. And public building is defined as any property that members of the public have access to. Private buildings are public buildings because the staff and employees have access to those property, e.g. filling stations, office buildings and hotels, among others, and some are not insured. That is why any time you hear stories about collapsed building or fire incident, you wonder who pays the liability. It is a huge economic loss. And in the absence of the insurance law, government pays for it.
All the government can do is to enforce the laws. Anybody who is in that business must show evidence of insurance, otherwise his business will be closed. But we, NAICOM, don’t have the power in the law to prosecute lack of compliance. We are also working with different agencies of government like the police, the fire services and like the building control agencies to enforce different policies of control. The level of compliance has not been that good. And the problem is the lack of power to penalise. So the law of 2003 is under review. We have already got a report submitted to the Minister of Finance to submit the report to the legislature for amendment.
NAICOM, NIRSAL collaboration
Our collaboration with NIRSAL in the area of agribusiness insurance has so far been very successful. Product approval has been granted to five companies participating in the pilot scheme of the farmers insurance scheme. This number will grow to 20 in the coming years. There are various importance of index-based agricultural insurance to Nigeria. It galvanises innovations that spur rural financial markets as financial institutions in Nigeria will be more willing to provide credit to rural and smallholder farmer households that have index-based agricultural insurance policy because these households will be able to utilise insurance pay-out in the event of loss to repay their loans.
Also, weather insurance products could also be used by financial institutions themselves to protect their portfolios against excessive loss due to defaults associated with extreme weather events. Another benefit of the index-based agricultural insurance is that it supports economic development as natural disasters can depress economic output, damage infrastructure, and increase fiscal demands on government and donor organisations. Using weather insurance to manage the risk of catastrophic weather events will stimulate economic development by improving stability and opportunities for growth in the agricultural and financial sectors.