By Maduka Nweke
The National Insurance Commission (NAICOM), has warned it would wield the big stick on insurance underwriters that fail or delay the statutory duty of timely rendition of the financial statements.
NAICOM’s statute demands that insurance companies are to submit their audited financial statements by June 30th of every financial year. But with less than two weeks to this cut off date, only 30 out of the 43 operators have submitted their accounts, while 13 others are still being awaited.
The Insurance Act imposes a daily fine of N5,000 on firms that failed to meet the March 30 deadline for the submission of their accounts.
A statement made available to the sector’s WhatsApp by the Head of Corporate Communications, Rasaaq Salami, listed companies whose accounts were approved as at June 13, 2017 to include FBN Insurance Life, FBN General Insurance, Sovereign Trust Insurance, Royal Exchange, Custodian and Allied Insurance, Custodian Life Insurance, Law Union and Rock and AIICO Insurance.
The list also includes NEM Insurance, Unity Kapital, Fin Insurance, Consolidated Hallmark, Cornerstone Insurance, Royal Exchange Prudential, Standard Alliance Life, Lasaco Assurance, Wapic Life Insurance, Wapic General, Ensure Insurance and AXA Mansard Insurance.
Others are Prestige Insurance, Regency Insurance, Leadway Assurance, Staco Insurance, Mutual Benefit Life, Mutual Benefits Assurance Plc, Continental Re, Zenith General Insurance, Zenith Life.
The statement added that out of the 43, insurance companies that submitted their 2016 accounts, NAICOM approved 30 while ARM Life, Nigerian Re, UBA Metropolitan Life, Sterling Assurance, KBL Insurance, Linkage Assurance, Standard Alliance General, Niger Insurance and Guinea Insurance are still being worked on.
Meanwhile, 13 other insurance firms such as Goldlink Insurance, Nicon Insurance, IGI, IEI, African Alliance, NAIC Insurance, Unic Insurance, Great Nigeria Insurance, among others, are yet to submit their accounts to the commission including suspension of licence.
NAICOM regulation requires insurance firms to submit their financial statements on or before June 30 every year, failing which will attract severe sanction from the Commission.
The Commission’s spokesman however maintained that the decision to impose sanctions on such companies became necessary, as their default deprives the regulator, policyholders, insurance intermediaries, analysts and other stakeholders of relevant information about their performance and financial conditions.
Statutorily, financial statement and annual report of limited liability companies contain very crucial information about their operations, earnings, performance, corporate actions and future direction of the organisation. Investors and analysts often see late or non-submission of such document as an indication of trouble for companies, especially in the face of the nation’s economic recession.
Nigeria has about 43 insurance companies including two re-insurance firms but still lacks the capacity and capitalisation to handle large ticket transaction hence their reliance on offshore underwriters for business like aviation, oil and gas upstream and maritime/shipping.
As at the end of 2015, total capitalisation of Nigerian Insurance industry was N213.2 billion, while Reinsurance companies registered N9.59 billion. The gross written premium of the sector was N134.06 trillion, while total assets was N894.88 billion with reinsurance posting N46.04 billion.
“The Commission is poised to implement relevant measures to discourage companies from filing late returns and sanction errant ones appropriately. Among others, this will include a detailed review of their accounting and financial reporting systems, restriction of certain activities until relevant returns are filed; action against officials accountable for financial reporting as well as publicising the compliance status of insurance institutions on our website for public guidance,” it said.