NAICOM takes lead for strategic balance to insurance industry

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By Favour Nnabugwu

Leaders in the insurance industry, like many other industry executives around the world, are seeking routes to profitable growth amid unprecedented economic, financial, and regulatory change. 

Today, the National Insurance Commission, Naicom, is taking stride to ensure insurance companies strike a strategic balance that will sustain profit growth and shareholder returns over the long term.

The  Commission  recognized  the  need  to  redefine  its Management  Strategies  in  order  to  appropriately  cope with emerging situations in the Insurance Industry. 

The plan, the regulatory body put in place is aimed at consolidating on the milestones achieved and to move the industry to greater heights

The Commissioner for Insurance, Mr. Sunday Thomas was particular about the Commission’s determination to succeed even in the face of challenges, resolute on the need for Naicom to strengthen the confidence already in place in recent time. 

Thomas at the 2020 NAICOM Seminar for Journalists in Uyo, Akwa Ibom State clearly said, “The terrain is tough but we are determined to succeed. Nigeria is not by accident the largest economy in Africa. We must take advantage of the population. There are a lot of things to fast track the process. The digital world will drive regulation”.

“NAICOM is an agency of the Federal Government and has the responsibility to make some impact on the economy. We will continue to relish the president’s appreciation of the industry,” he said.

“If there is a need for change let us know and if there is a need for me to explain I will not hesitate to do that. We have challenges ahead of us but we are determined to overcome those challenges. We try as much as possible to let investors, government and stakeholders into our programmes”.

Acknowledging the fact the investment climate was tough, he said, the commission is determined to make a difference as there will be no hindrance to information dissemination”

The Deputy Commissioner for Insurance (Technical), Alhaji Sabiu Abubakar who expressed his dissatisfaction of insurance companies that changed location yet do not update that on the website to reflect their new place, not for any reasoning save for delay to do other things first.

He frowned at the development without mincing word, “If an insurance company changes its location and address, it should inform the insurance holders of their new location and numbers”

“If an insurance company changes its address or phone number from the one we have in the commission, it should quickly contact us and the policyholders (the insured). There will be sanctions for any insurance company who fails to do this”.

The man under which the purview rested, Mr. Abiodun Aribike, Deputy Director (Information Technology) in a paper entitled: ‘Digital Transformation of NAICOM’s Processes and Procedures’ said the Commission’s digital platform will essentially capture all insurance policies issued in Nigeria with a unique identifier.

Aribike said the platform will generate a unique policy identification number for all issued policies necessary to ensure fidelity and validity of all policies in the country and also obtains and manages information on all insurance policies, and premiums sold by insurers, brokers and agents. 

The platform according to him, “will provide information on policies to members of the public and provides management information to NAICOM regarding summary and/or details of all policies by company, broker, and agents”

“Ensure proper accountability of all premium returns by insurance companies, captures all businesses done by every broker through the underwriter, ensures proper accountability of all insurance levies received from brokers.

“Provide easy access to data regarding policies issued, to support analysis and policy based decision making, provides a means for members of the public to validate the Insurance Policy issued by the appropriate Insurance stakeholder and allow Law Enforcement personnel to verify any insurance instrument tendered to them in the course of performing their function.”

Most importantly, it provides NAICOM a platform for interconnecting all industry stakeholders to support real time aggregation of data on policies at the time of underwriting and policy issuance, he said.

He outlined the benefits of the transformation to include: Enhanced Stakeholder experience and satisfaction; Increased Revenue, Reduced Cost and blockage of leakages; Improved Productivity; Increased Efficiency in Service Delivery; Enhanced Data Collection and Analysis; Data Driven Insight and Decision Making; Increased Agility and Innovation and Improved Resource Management

The Head, Market Development of the Commission, Mr Adeyemi Abubakar

said the strategy of the commission for penetration include setting up weekly insurance Community Development Service (CDS) for corps members in the states.

According to him, corps members who belong to the insurance CDS group, will go round to educate communities on the benefits of insurance.

Abubakar said that the move would promote public understanding of insurance mechanism, build confidence and help in the enforcement of compulsory insurance”

“We want to collaborate with NYSC for the establishment of weekly CDS on insurance in the states. They will go round to sensitise the people and educate them on the benefits of insurance.”

“People need to begin to talk about insurance in schools and other places the way they talk about banking. We want to instil trust in the minds of the people to build their confidence.”

He also pointed out that the commission is also partnering with the states’ fire service, revenue office and states’ Head of Service to help in the enforcement of insurance schemes.”

He though acknowledge that the insurance sector still has huge untapped, opportunities, adding that the potentials will help to improve insurance premium and contribute to the growth of the Gross Domestic Product (GDP) of the country.

Defining the primary mandate of the market development unit of the Commission, he said, “is to develop Insurance Market with the objectives of deepening Insurance penetration in all the States of Federation, with the clear goals of promoting market efficient, fair, safe and stable Insurance market for the benefit and protection of policyholders”.

 The Head, Takaful Insurance of NAICOM, Mr Zubairu Darazo believed that that lack of understanding of the model of the insurance among insurance companies.

In his paper titled, ‘Insurance Development in Nigeria: The Financial Inclusion Option’, Darazo said that takaful and micro insurance will take care of the insurance needs of low income earners.

He is of the view that more companies will still be registered at the micro level aside the four already registered.

Despite government’s effort and the huge potentials for such a unique service, the growth in Takaful operations is still at a nascent after over a decade of existence. 

The Head of Takaful Insurance of the National Insurance Commission, Mallam Zubairu Darazo on the theme: ‘Insurance Development in Nigeria: The Financial Inclusion Option’, said as the country aspires to become a major international financial centre in the continent by the year 2020, the development of Takaful as a major segment of Islamic finance remains paramount operations  and  benefits  of  Takaful  still  prevails. 

Takaful ought to have recorded great success in Nigeria considering several positive factors, unfortunately, lack of proper understanding of both concepts by the operators and consumers as well; Poor public awareness and lack of skill man power.

He pointed out that the goal of achieving the target of 40 percent adult population penetration will be pursued through a broad range of coordinated interventions included to provide enabling environment and framework for the excluded and low income population to participate and benefit from Insurances, through the development of legal and regulatory frameworks on Takaful and Microinsurance (the Commission issued the 2 Guidelines in 2013).

The liberalization of Insurance intermediaries: referral agencies and new insurance agents; Define and implement insurance literacy programmes; 

Enforce quick settlement of claims and sanctions for infractions (establishment of a dedicated department complaints bureau in the Commission) and Incentivise insurance companies to develop micro-insurance products, Takaful insurance and index-based insurance products to serve low-income/rural individuals

Consequently, certain recommendations have been made to reverse the ugly trend. As a matter of urgency, the issues raised need to be addressed to facilitate accelerated development of Takaful operations and contribute towards achieving the much-needed revitalization of the Nigerian financial system.

The takaful companies are Noor Takaful Insurance Ltd; Jaiz Takaful Insurance Plc; Salam Takaful Insurance Ltd and Cornerstone Takaful Insurance Coy. Ltd which are full pledge ones while African Alliance Insurance has a window of it

With a claims ratio of 27 percent and claims settlement approximately put at N540million, the insurance industry expect a premium of N2billion from takaful business.

However, the Commission projected positive outlook for both Takaful and Micro going forward through a number of stakeholder engagements workshops and sensitization programs are lined up for the year 2021

The market, Darazo said has development and enforcement of compulsory insurance drive embark by the Commission is expected to improve the uptake of Takaful and Microinsurance as well.

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