August 24, 2019 / 01:00PM / By Ekerete Ola Gam-Ikon* MNIM, CPP / Header Image
Credit: Insurance Samadhan
all climes, the connection between the government and the people is the LAW! So
it is in different circumstances that connects one group to another and the insurance
sub-sector is not an exemption.
There are insurance laws guiding the relationship between the Federal Government of Nigeria represented by the National Insurance Commission (NAICOM) and the citizenry, represented by insurers, brokers and agents, those I connote as "Trustholders". These laws are, principally, NAICOM Act 1997 and Insurance Act 2003.
The first defines and stipulates what NAICOM represents and how it functions while the second conveys the Do's and Dont's of the operations of the business of insurance in Nigeria.
Need for Amendment
Over the years, between the time these laws became effective and when the calls for amendments started, several significant changes had taken place in our national economy and especially in the financial services sector culminating in the global economic recession of 2008.
The insurance sub-sector, like others, initially seemed insulated but suffered terribly from the effects of the actions of investors in the capital market. Some of us would recall that several insurance companies were just stepping out of the capital market where they had gone to raise funds to meet the regulator-induced recapitalization hence the reason for the heavy deficit in capital position resulting from the loss in the capital market.
At this time, justifiably, the Federal Government through the Federal Ministry of Finance that supervises NAICOM, decided to have a Committee led by the erudite Professor Joe Irukwu to review the insurance laws and on that basis, pursue the amendment of an obviously stale and retrogressive set of laws. The excitement associated with the reviews of the laws was unprecedented and wholesome especially from the point of view of operators. The failure of NAICOM to carry out capital verification exercise at the time may be attributed to such excitement.
Effectively, there were evident movements along the corridors and stands of the National Assembly but the Insurance Amendment Bill 2008 did not arrive its destination!
IFRS and Disruptions Berth
While the industry operators grappled with the real effects of the capital market crash in Nigeria, the struggle to survive was compounded by new regime of financial regulation, for example, IFRS and disruptions resulting from technological innovations that were changing the behaviours of consumers.
These global agreements and resolutions, quite naturally, demanded the review of our insurance laws and by early 2016, the Federal Government inaugurated Dr. Omogbai Omo-Eboh led Committee to "review all the insurance laws in Nigeria to align with international best practice and to examine current market problems and recommend appropriate regulatory powers to allow the insurance sector thrive". Again, the review was to "form the basis for a draft bill to be forwarded to the National Assembly for enactment into a new insurance law", that is, the Insurance Consolidated (Amendment) Bill 2018.
Need I say, the current location of the Bill is unknown?
Bill is Necessary for Proper Recapitalization
As the industry undergoes another recapitalization process, it is very necessary to consider the Insurance Consolidated (Amendment) Bill, this time not to derail or negate the process but to ensure that the changes envisaged are wholesome and transformational.
Recapitalization, like some of us have expressed, is only one of the problems of the insurance industry in Nigeria and only the amendment of the laws can duly address the other problems bordering on governance and protection of policyholders.
The experience where companies that have been mismanaged by certified insurance professionals are taken over by NAICOM without prosecuting anybody, and 3-7 years later the Regulator is still there while the companies struggle to meet their obligations cannot be allowed because the law is ambiguous!
As we welcome the Fourth Industrial Revolution, I ask: Where is the Insurance Consolidated (Amendment) Bill? Shall we continue to rely on the release of Regulations and Guidelines to attempt changes to the ineffective environment that the insurance industry operates in?
It is our expectation that the Federal Government through the Federal Ministry of Finance can see the Bill through the current National Assembly.
The citizens deserve a better insurance industry in Nigeria!
About The Author
Ekerete Olawoye Gam-Ikon, MNIM,
CPP is a management consultant with specialization in Strategy and
Insurance. He can be reached vide telephone on +234-806-648-1111 and
+234-802-585-0344 or by e-mail vide email@example.com
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