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FG screens out 54 brokers, eight insurers in 2010 group life

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FG screens out 54 brokers, eight insurers in 2010 group life

 

Federal government group life insurance account flagged on March 1, 2010 is generating ripples among insurance operators in the country. The latest in the out cry against the process that led to the selection of insurance companies and brokers for the 2010 account are 54 brokers and eight underwriters which felt schemed out of the selection process.

 

 

Of the 600 insurance brokers in the country, only 110 were qualified to  apply out of which 56 were selected. 17 insurance companies also scaled through out of the 25 that indicated interest while 54 insurance brokers and eight insurance companies were screened out on the basis of not meeting one requirement or the other.Some of the criteria set by the federal government for insurance companies include submission of a three year audited account with a minimum financial base of N 2 billion; 2008 National Insurance Commission (NAICOM)’s approved account; profile of top management and current tax clearance certificate. In the case of insurance brokers they were required to summit companies’ profile; account statement and branch operations profile.

 

 

Vanguard investigations showed that some of the companies that could not make the list did not present current tax clearance certificate or had a beef to settle with NAICOM over their account perhaps had a questionable management profile among others.For instance, if an insurance company has a shortfall in its net asset below N 2 billion required, due to one reason or the other, the commission will advised the company to inject funds so as to add to up the N 2 billion else the company’s account will not be approved by NAICOM.

 

 

The insurance commission had said that it would no longer tolerate inadequate financial disclosure and all other forms of unethical practices from any operator. Though, NAICOM had in the past taken firm measures against abuse of market rules and regulations but this time around the commission meant serious business.

 

 

The insurance regulator has put in place appropriate enforcement or sanctions where its rules and regulations are broken. Some of the sanctions include restricting business activities; stopping the writing of new business; withholding approval for new activities or acquisitions; directing affected companies to stop practices that are unsafe and unsound; removing directors and managers and even revoking the license of an insurer.

 

 

Moreover, the federal government over the years had allowed and swept certain mischief under the carpet in the name of national cake but this time around, the current government insists that things must the done the proper way thus ensuring that insurance companies pass its test if they wish to have a share of government accounts.

 

 

A top government official who spoke to Vanguard on anonymity said that the federal government business is no longer for grabs by every Tom Dick and Harry.He said that the government wants value for every kobo it spends hence the selection of 17 insurance companies and 56 insurance brokers that met its set criteria.

 

 

For the first time in the history of government business, the federal government meritoriously incorporated five brokers to assist it in the negotiation of the premium for the cover, a service brokers keenly rendered free of charge, according to Vanguard findings thus arriving at N 7 billion premium for the cover.

 

 

The brokers are: Hogg Robinson Insurance Brokers, Ark Insurance Brokers Limited, Leverage Insurance Brokers Limited, Glanvill Enthoven Nigeria Limited and Standard Insurance Brokers.Vanguard investigations further revealed that the brokers which served as consultants to the government were not part of the screening and selection of insurers or brokers but assisted the government in the negotiation of the premium which was binding on the 17 insurance companies selected.

 

 

There had been protests and petitions over the selection process and even some of those that made the list of 17 insurers still  had one grouse or the other over the proportion awarded to them and they tend to blame it all on the five brokers.But Mr. Tope Ajakaiye Assistant Director (Press and Public Relations) in the office of Head of Service affirmed that there was no abuse in the bid process.

 

 

He said: “The initiative of the Head of Civil Service of the Federation should indeed be appreciated. By precedent, the Federal Government would have spent about N 22 billion on premium but the HOS was able to save about N 15 billion. The government is only paying over N 7 billion.“I have to establish that as human beings there is no system or initiative that will be done by government and some people will not feel aggrieved. It was a competition and some people won and some others lost. Definitely those who felt they have lost out may not be happy with the process.

 

 

“But I tell you that this is the first time that the process has been so open.”What happened was that about 25 of the insurance underwriters applied and 17 of them were granted and one of the criteria used for the 17 underwriters was the company’s financial base, which is very important in payment of claims.

 

 

“The Head of Service was not personally involved. What he did was that he set up an implementation committee headed by a Permanent Secretary with about two other Permanent Secretaries as members and then some directors. This committee was being advised by the five consultants from the insurance industry based on their experience in relationship with the government.

 

 

‘The whole thing was followed duly, and recommendations were made to Bureau of Public Procurement which gave approval before it was taken to the Federal Executive Council for final approval. There you know that would have been debated and scrutinized before the council gave its backing to it.

 

 

“So, if they are saying that it was manipulated at the head of service table, BPP also followed the manipulation and the FEC was also involved in the manipulation? No, that is totally wrong. Everything was done in line with the guiding rules”.


(Source:Vanguard)



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