By Henry Uche
By Henry Uche, [email protected], 08032741427
For most analysts, Nigeria’s insurance sector cannot be said to have done badly in 2023, despite the harrowing economic environment.
Kudos to both operators including, insurance brokers, agents, loss adjusters, industry watchers, insurance analysts, and other critical stakeholders who played along with the regulator’s policies, regulations, programmes and other directives as they all did their best to empower the sector.
Pay less gain more
In the year 2023, a new Premium Rate For Motor Insurance took effect in January following a circular from the Commission issued to Insurance institutions and newsmen in December 22 2022.
According to the Commission, private vehicles that were paying N5,000 as insurance premium for N1 million Third Party Property Damage (TPPD) limit, were directed to now pay N15,000 premium for N3 million, while owners of good vehicles are now paying N20 ,000 premium for N5 million, while staff buses are now paying N20,000 premium for N3 million.
For commercial trucks and general cartage, they are to pay N100,000 premium for N5 million TPPD limit; tricycles N5,000 for N2 million TPPD limit, and motor cycles N3,000 for N1 million TPPD limit. While comprehensive motor insurance policy Premium Rate shall not be less than five percent (5%) of the Sum Insured after all rebates/discounts. The new rates were enforced for the benefits of vehicle owners.
NAICOM warned that failure to comply with this Circular shall attract appropriate regulatory sanction. . To ensure better understanding and acceptability, NAICOM organised sensitisation programmes on compulsory insurances across different locations in the country.
Operational efficiency
In the year under review, the Commission issued some other guidelines as part of its strategic objective to drive innovation of products and services, and to ensure that operators conduct their affairs professionally in the conduct of their businesses in line with international best practices.
The Guidelines includeInsurance Regulatory Sandbox Operational Guidelines; Market Conduct Guidelines for Takaful and Retakaful Insurance Operators; and Enterprise Risk Management Framework for Takaful and Retakaful Operators in Nigeria, charging all operators to compliance promptly for benefit of all stakeholders.
Collaborations
Since everyone needs one other to survive, members of Nigeria Employers’ Consultative Association (NECA) led by its Director General (Mr. Adewale Smatt-Oyerinde) visited NAICOM in May. The purpose of the visit was on the need for more sensitisation and on the upward review of 3rd party motor insurance as well as to explore other areas of collaboration to sensitise employers and employees on the importance of Group Life Insurance.
Similarly, in May, members of the Independent Shareholders Association of Nigeria, (ISAN) led by its National Co-ordinator, Moses Ibrude, paid a courtesy visit to the Commission, where both had discusion on how to deepen regulatory compliance, corporate governance and transparency in the sector.
Also, the Management of the National Information Technology Development Agency (NITDA) led by its Director General/CEO, Kashifu Inuwa Abdullahi, paid a courtesy visit (in June) to the Insurance Sector Regulator, NAICOM.
Still on collaboration with relevant agencies, the Management of Abuja Metropolitan Management Council (AMMC) led by the Director, Development Control at the Federal Capital Territory Administration, Mukhtar Galadima, paid a courtesy visit to the Commission in the same month. They were received by the Commissioner himself and his management team. The purpose of the visit was to explore areas of collaborations in order to enforce compliance by building developers and occupiers of public buildings in line with sections 64 & 65 of the Insurance Act 2003. The two agencies setup a Joint Committee to work out the modalities for the enforcement of these compulsory insurances within the FCT.
A new feather added to Thomas’ cap
Undoubtedly, because of his landmark achievements in the sector, the Nigerian insurance czar was in July elected President of the Organization of African Insurance Supervisory Authorities (OAISA). Saddled with the responsibility of promoting cooperation among African Insurance Supervisory Authorities, to share experience in the effective supervision of the insurance industry in Africa for the development of Insurance Markets for the benefits and the protection of policyholders; contributing to capacity building and financial stability of the African Continent. He is no serve the continent for a period of two (2) years in the first instance, renewable once. It is imperative to note that Mr. Thomas was the pioneer chairman of the West Africa Insurance Supervisors Association, WAISA.
A further step to deepen insurance and bring it to the limelight, the Nigerian Actuarial Society Discount Rate Committee (NAS-DRC) was inaugurated by the Commissioner for Insurance on Wednesday, 12th July, 2023.
The Standing Committee was to support the setting of a standardized basis of determining discount rate factors for use by the insurance industry and other stakeholders in the financial services sector, particularly in the implementation of the International Financial Reporting Standard 17 (IFRS 17), Insurance Contracts.
In other not to be found wanting from within, NAICOM and Financial Sector Deepening Africa (FSD Africa) strengthened its partnership with Risk Based Capital training session for 70 staff members of NAICOM, aimed at boosting their capacities, foster growth and innovation in the industry. Our report has it that the two weeks training facilitated by Mr. Elias Omondi, Principal in charge of innovation at FSD Africa, was beneficial to NAICOM in the following ways: Development of Risk Based Capital framework and toolkit; Incorporation of Economic, Social and Governance (ESG) Principles into NAICOM’s operations; and development of innovative portrait which would facilitate innovation for the regulator and insurance operators amongst others.
Still on capacity building, NAICOM in its usual manner took insurance and pension correspondents to Akwa Ibom State, on a three day seminar to further deepen their understanding about the sector operations.
Campaign for halt public building collapse
In September, NAICOM paid a courtesy visit on the Executive Governor of Nasarawa State, Abdullahi A. Sule, to intimate him and members of his executive council about the benefits of insurances as part of the Commission’s drive to sensitise stakeholders on the benefits of compulsory insurances (Public Buildings and Buildings Under Construction, 3rd Party Motor Insurances amongst others).
In another visit by the Commissioner, Emir of Kano, Ado Bayero, urged nigerians to embrace insurance as a way of relieving loss, especially in businesses and property loss.
Also, Thomas led a delegation on a courtesy visit to the Minister for Housing and Urban Development, Arc. Ahmed Musa Dangiwa. The aim was for both agencies to be in the same page in area of compliance with the laws on public buildings and buildings under construction across the country.
Recapitalization proposal
The NAICOM National Conference Abuja in October saw the Founder/Chairman of Heirs Holdings & UBA Group, Mr Tony Elumelu, proposing N30bn capital base for general insurance, N20bn for Life insurance, N50bn for composite Insurance and N1bn capital base for insurance brokers. This according to him was to enable the operators meet current market realities (challenges and prospects to compete favourably in the dynamic and troubled global business environment. NAICOM is yet to respond to Elumelu’s idea.
Need for insurance budget
In the last quarter of the year, NAICOM boss took another bold step by enjoining federal and state governments to begin to make adequate provisions for insurance of public buildings and buildings under construction in their respective annual budgets, in line with extant insurance laws in Nigeria and should be complied with by all.
According to Thomas, Section 64 of the Insurance Act 2003 makes it mandatory for individuals, governments and corporate organisations that undertake the construction of any building above two (2) floors to procure a builder’s liability insurance policy (building under construction) from any of the NAICOM’ licensed Insurer in Nigeria.
Speaking further, he said Section 65 of the Insurance Act 2003 also makes it compulsory for all public buildings in the country to be insured. This is to protect innocent victims in the events of accidents and other disasters that may occur while they are within such premises.
He made this known at the 12th meeting of the National Council of Lands, Housing and Urban Development, holding in Kaduna State, which involved: Minister of Housing &Urban Development, Arc. Ahmed Musa Dangiwa; Minister of State, Housing & Urban Development, Abdullah Tijjani Gwarzo; Chairman, Senate Committee on Housing & Urban Development, Sen. Aminu Tambuwal; Chairman, House Committee on Housing & Habitat, Hon. Balele Aminu.
Others were: Chairman, House Committee on Urban Development & Regional Planning, Hon. Abiante Awaji; The Permamnent Secretary, Federal Minstry of Works & Housing, Mahmuda Mamman; Commissioners, Permanent Secretaries, Directors of Lands and Housing from the 36 States of the federation; Managing Director of Federal Mortgage Bank of Nigeria, Nigeria Mortgage Refinancing Company, Shelter Afrique, etc.
Q3 industry financial report
In the third quarter of the year under review, the Insurance market total assets hit a total of N2.8tr while its Gross Premium Written (GWP) closes at N729.1bn. With these figures, there seems to be hope for the industry to hit One Trillion Naira GPW, before the end of the year 2023, as anticipated by the regulator.
NAICOM in its third quarter 2023 Insurance market abridged report, titled “Nigeria Insurance Market At A Glance – Q3, 2023” made available to newsmen, stated that its Gross claims and Net claims respectively stood at N365.5bn and N259.0bn. Full report can be found in Daily Sun website.
Underwriters feedback
Feedback from some underwriters revealed that they really battled with horrifying economic headwinds, however they could say that all was not too bad nor uhuru, hence the need to forge ahead and remain auspicious in the coming year. They vouched for ability of Mr Thomas to still do more greater things for the sector coming year.
Other stakeholders in the insurance value chain and insurance consumers similarly expressed optimism in 2024, nonetheless, they urged the federal and state government to review itself, assess itself in terms of Policies and programs and judge themselves and think of what to do immediately from January, saying, “If they did well, they know, if they didn’t do well, they still know, let the government across the tiers and arms do a self assessment and judge and score themselves, then come up with something different in 2024”
They maintained that they (insurance consumers and other stakeholders) know exactly government’s performance standing, having felt the impact of the harsh economy, adding “they don’t have empathy, they don’t feel our pains because they have everything at their disposal with public resources, but we are telling them to do what is ideal in the interest of the masses, and do it fast, because the suffering in the country is not only excruciating but depressing- incessant and indiscriminate killing and suicides are sufficient proofs” they charged.