Posted by Sunday Ojeme
Activities in the insurance and pension sectors in the last six months were reflective of efforts by regulators, operators and other interested stakeholders to reform the industry in the interest of policyholders, shareholders and workers respectively, Sunday Ojeme reports
The insurance industry in the last six months of the year experienced another round of reforms following the early release of reinforced operational guidelines by the regulator, National Insurance Commission (NAICOM), to operators.
The guidelines, according to the commission, became necessary to enable it review the books of the underwriters and also to protect the interest of shareholders and policyholders.
To drive home its seriousness, NAICOM, in the circular entitled: Statement of NAICOM’s Regulatory Priorities for the Year 2017, itemised top priorities to be pursued during the year to include Market development; Capital verification; Management Expenses of Insurance Companies; Statutory Returns; Risk Based Supervision; Information Technology; Competence of Directors Senior Management and Persons in Control Functions; Corporate Governance and Service Delivery by the Commission.
It was specifically meant to acquaint industry operators with issues that would guide their operation throughout the year and also enable them prepare for the changes that may be required.
NAICOM posited that it would re-launch the Market Development and Restructuring Initiative (MDRI) with special and intensified implementation efforts on areas such as: Enforcement of Compulsory Insurance; Diversification of Distribution Channels; Increase in Access Points for Insurance Services; Micro Insurance; Takaful; Improvement in Data Collection and Promotion of Financial Literacy.
The regulators said to ensure protection of policyholders and beneficiaries of insurance contracts against unexpected losses of insurance companies, it would undertake a verification of the capital resources of all the operators in the first quarter of 2017.
Expressing concern over the high expenses of some insurance institutions, it promised to pay detailed attention to reasonableness of management expenses to ensure that each company’s level of expense is appropriate for its business model and does not adversely affect its profitability, liquidity and capital adequacy.
According to the commission, “a number of companies submitted their statutory returns for the year 2016 late. At the time of issuance of this statements some are yet to submit the required Returns and without explanation. This deprives the Commission, Policyholders, Insurance Intermediaries, Analysts and other Stakeholders of the relevant information about the performance and financial condition of the Companies, as well as the level of their compliance with relevant provisions of the law.”
The circular also intimate of the commission’s willingness to implement relevant measures to discourage companies from filing late returns, and sanction errant ones appropriately, stressing that among others, this would 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 firms on its website for public guidance.
It posited that the final road map for the Industry’s transition to Risk Based Supervision (incorporating all the suggestions made by the Nigerian Insurers Association), will be issued by the end of January 2017.
“There is no doubt that the application of Information and Communication Technology (ICT) is a critical success factor in the running of any business today and the Insurance Industry continues to explore the benefits it offers. Information technology applications are catalyst to the development of any industry but not without its challenges, the most critical of which is security. The Commission is to establish the framework for Information technology supervision of insurance Institutions and promote arrangements for efficient and more cost effective applications in the Insurance Industry,” it said.
Stalled rebranding project
During the period under review, a major campaign launched for the commencement of the industry rebranding project fizzled out ostensibly due to the regulator’s operational guidelines.
Although issues surrounding contribution to the N300 million project between NAICOM and individual firms under the umbrella of Nigerian Insurers’ Association (NIA) had created some problems, feelers from the industry, however, revealed that the operators suddenly became more concerned with cleaning their books for the regulator’s inspection than embarking on the awareness campaign.
The project, which was originally slated to take place last October, was moved to the first quarter of 2017 following arrangements by the planning committee to ensure its success.
The underwriters had conceived the rebranding initiative as a vehicle to transform their businesses with resolution to propel the multi-million campaign through radio and social media channels
However, following series of developments, it was envisaged that rather than engage fully in the rebranding project, underwriting firms without the requisite capital adequacy would struggle to firm up their accounts and deal with issues of corporate governance before the regulator lowers the hammer on them.
“What the regulator is set out to do is a welcome development except that it is coming almost the same time the industry operators were putting heads together to rebrand the industry and make it attractive to the public.
“Now that both are coming at the same time, I believe priority would be given to keeping the business afloat first before thinking of rebranding because if the business is not there then there would be nothing to rebrand,” an industry source revealed.
Chairman of the Insurer’s Committee on Publicity, Oye Hassan Odukale, had promised that the first phase of the multi-million naira project would utilise the online medium such as Facebook and Twitter, among others,to create awareness on the need to subscribe to insurance products and services following the rapid increase in the number of Internet and online users in the country.
Another remarkable event during the half year operation was the unveiling of a unique technological platform with capacity to redefine operation and make transaction between insurers and policyholder simpler that it used to be
Unveiling the platform in Lagos, the Chief Executive Officer, ATB Techsoft Solutions Limited, an Information Technology and Software development company, Abiodun Atobatele, said the solution would revolutionise insurance operations in Nigeria and placed the industry at the same level with its counterparts in other climes.
Codenamed Ultisure, the platform a suite of software solutions for insurance policy administration with the requisite flexibility and robustness for the industry.
With the software, customers are at liberty to create any insurance product irrespective of the complexity level and commence underwriting operations as quickly as possible.
It also handles core insurance processes and has additional features that complement these processes and could be decoupled as independent systems.
“We are very proud of what we have achieved with this solution we are releasing to the market, which stands its own amongst any currently in the market. This solution is a result of seven years of dedication, hard work, research and investment, which could not have been achieved without our software architects, whom can be ranked amongst the smartest people in the world.
“What we have done is to offer software solutions of higher standard and functionality to the market as against what most organisations are purchasing offshore and at a much lower cost. This means Nigerian organisations do not have to spend hundreds of thousands of dollars to procure software abroad,” Atobatele said.
In the pension industry, the major episode during the period was the termination of the Director-General, National Pension Commission, Mrs. Chinelo Ahonu-Amazu’s appointment.
Although the sack raised some dusts as it almost turned into an ethnic battle with the initial appointment of a northerner, Abdulahi Diko, as replacement, calm has since returned to the the agency as Diko was subsequently replaced with Funso Doherty.