It would appear that insurance industry regulator, the National Insurance Commission (NAICOM), will not be taking its eagle eye off operators anytime soon as it will continue with a view to carrying out more licence revocation, especially of insurers who renege on their obligations to the insured.
Errant insurers are therefore in for difficult times ahead with the regulator, which has warned that more of them would have their licences revoked as it presses on in its bid to clean up the insurance sector.
Last month, the National Insurance Commission (NAICOM) in a statement, said that it had revoked the licences of Standard Alliance Insurance and Niger Insurance from June 21 2022 without putting a thread in the needle as to the official reasons, but Abubakar Sani, its chairman, appear to give hint at a separate occasion given an indication of the reasons behind the action.
Sani in a recent interview said: “We have to sanitise the institutions and we will not allow weak companies to continue, in order to protect policyholders. This is important so that at the end of the day, nobody will accuse us of having weak regulations.”
According to him, “The revocation of licence is not something that is done in a day because the Insurance Act of 1997 prescribes investigation and inspection, and they are statutory. If a company starts failing, does not meet the requirements, or the management control is not there, the licence can be withdrawn.
“Even then, by law, you are allowed to appeal to the minister who would decide whether the due process was followed. So, it is never about bias, and more companies that do not meet up will also face sanctions.”
On the issue of recapitalisation in the industry, which has been suspended by NAICOM since December 2021, Sani declined to comment, pointing out that the case was in the courts and it would amount to contempt to discuss the matter.
But he stressed that capitalisation was inevitable in order to enable the industry to compete favourably with emerging market peers.
“We have to be honest to ourselves, this economy is dynamic. The capital and assets of the NNPC today are in trillions of naira. It was not so 10 years ago. They need insurance to cover their risks. So, because of that, there is a need for improvement and recapitalisation so that they can sell insurance effectively and avoid capital flight. If you want to really be a player, you don’t even need the regulator to ask you to recapitalise. You are the one that will increase your capacity in order to compete.”
Sani also said NAICOM would look at the Insurance Act of 1997 to see if there were aspects of the law impeding insurance growth and make efforts to amend them.