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By Henry Uche
Tongues are wagging following the presentation of an operational licence to Nigeria Police Force (NPF) Insurance Co. Ltd by NAICOM.
The Commission disclosed this in a statement made available to insurance writers, after a brief ceremony held in Abuja.
According to the statement, this development enables NPF Insurance to commence general insurance operations in Nigeria, having successfully fulfilled all registration requirements. The Commissioner for Insurance, Mr. Olusegun Ayo Omosehin, formally handed over the license to the representative of NPF Insurance Co. Ltd, Mr. Temitayo Oke.
An erstwhile Commissioner/CEO of Insurance, Mr. Mohammed Kari had kicked against the registration of the Nigerian Police insurance company on the grounds that the police lack the ability to effectively manage a business laden with high risks.
The former Commissioner of Insurance in a detailed letter to the NAICOM, titled, ‘Registration of the NPF Insurance Company- An objection’, dated July 25, 2024, copied the federal Ministry of Finance; Chairman, National Insurance Commission; Chairman, Senate Committee on Banking, Insurance and Others Financial Institutions; Chairman, House Committee on Insurance and Actuarial Matters; Director General, Bureau for Public Enterprises; and Chairman, Nigerian Insurers Association, said his objection was based on several critical concerns which he believes calls for serious consideration.
Kari, who has had a distinguished career in the Nigerian insurance industry from 1979 to 2023, brings a wealth of experience to his critique. His roles included serving as the Managing Director/CEO of Nigeria Reinsurance Corporation and NICON Insurance Plc, and later as Commissioner for Insurance/Chief Executive of NAICOM. His extensive background as both an insurer and regulator of the Police’s insurance matters lends considerable weight to his objections.
Kari’s letter outlined several core concerns. First, he argues that the core mission of the Nigeria Police Force—to uphold law and order—is fundamentally incompatible with the operational dynamics of a commercial enterprise. He warns that integrating an insurance company into the Police’s portfolio could create significant conflicts of interest. Specifically, the Police’s role in enforcing compulsory insurance laws could lead to potential abuses, where the temptation to leverage their regulatory power to promote their own insurance company might prove irresistible.
Moreover, Kari questioned the capacity of the Nigeria Police Force to manage an insurance company effectively. Nigerian insurance laws stipulate rigorous standards for expertise and governance that, according to Kari, are currently lacking within the Police Force’s board and leadership. The historical mismanagement of the Nigeria Police Pension Scheme further exacerbates concerns about the Police’s ability to handle the complexities of an insurance business.
Kari also cautioned against the potential disruption the new venture could cause to the existing insurance sector. The entry of a Police-run insurance company might fragment the industry, resulting in inefficiencies and data loss that could undermine the stability and integrity of the sector. Kari emphasizes that approving this proposal could set a troubling precedent, potentially prompting other government agencies to seek similar licenses, which could further destabilize the insurance market and counteract the government’s divestment policy.
In light of these concerns, Kari strongly urged NAICOM to reject the application for the Nigeria Police Insurance Company Limited. He argues that it is crucial to keep the Police focused on their primary law enforcement duties and ensure that the insurance sector remains under the management of entities with the appropriate expertise and independence.
In response to Kari’s objections as at then, Mr. Gus Wiggle, President and Chairman of the Governing Board of the Risk Managers Society of Nigeria (RIMSON), suggests a nuanced approach. He asserts that if the Nigeria Police meet the requirements stipulated in the Insurance Act 2003, they should be granted the right to establish an insurance company. Wiggle advised NAICOM to carefully consider both Kari’s objections and the Police’s proposal, stressing the importance of insurance penetration in Nigeria. He urged that the Police be given a chance to address Kari’s concerns and provide evidence of their capability to manage an insurance company effectively.
Having said that earlier, Mr. Wiggle, in a telephone interview yesterday responded thus: “My response is that it’s a welcome development. Maybe with their (NPF) entrance, the parent organisation will help enforce some of the compulsory insurances and minimise or eliminate touting of motor insurance in local government offices or VIOs” he submitted.
Like Mr. Kari, a risk management expert and former president of RIMSON, Mr. Ray Akalonu, had earlier advised the Nigeria Police to refrain from entering the insurance business. He highlighted the Police’s struggles with managing the Nigeria Police Microfinance Bank as an indication of their limited capacity for risk Management. Akalonu advocated the involvement of specialized professionals in the insurance sector and suggested that the Police focused on their core law enforcement functions and seek to improve their existing operations.
Having granted them operational license now, Mr. Akalonu threw weight behind NAICOM who in its wisdom had found the Nigeria Police ‘fit and proper’ to run an insurance/ risk management business. He said “NAICOM has deemed it fit to license them, because it would increase capacity of the market, it would enhance insurance penetration, and more importantly, it would assist in enforcement, because enforcement is very critical. Now they (Police) are stakeholders, they would help in enforcement. Since the regulator has weighed all opinions, objections and supports from different quarters, and found them worthy, having met regulatory requirements, I think it’s a way forward particularly on enforcement” he submitted.
The discussion around the registration of a Nigeria Police insurance company reflects broader issues concerning the intersection of law enforcement and commercial interests within Nigeria’s insurance sector. As NAICOM has granted them license, the fears, worries and optimism of experienced industry players would be justified by time, sooner or later.
