In a bold move to facilitate ethical pratices in the insurance industry and to protect government assets and liabilities from being exposed to risk, the National Insurance Commission (NAICOM) has issued a stern warning to all Ministries, Departments, and Agencies (MDAs) to refrain from engaging the services of unlicensed brokers, agents, and insurance institutions.
The insurance industry regulator stated this in its guidelines for Insurance of government assets and liabilities for Ministries, Departments and Agencies of Government and Other Stakeholders, issued on October 28, 2023.
The insurance industry regulator, stated that as an adviser to the federal government on insurance related matters, it observed challenges on the insurance of government assets and liabilities which has led to avoidable expenditure by the government.
NAICOM maintained that the development is in exercise of the powers conferred on it by the provisions of National Insurance Commission Act 1997, Insurance Act 2003 and all other powers enabling it in that behalf, with the approval of the minister of finance and coordinating minister of the economy.
The new guideline builds on previous guidelines and circulars issued by the commission, including the SGF Circular and NAS Resolution Referenced NAS/CAN/35/VOL.1/539 22. It provides a comprehensive and updated framework for the insurance of government assets and liabilities, including minimum requirements for insurance policies, compliance and reporting procedures, and penalties for non-compliance.
According to NAICOM, all MDAs are required to ensure that government assets and liabilities under their custody or supervision are adequately insured at all times. In particular, all MDAs are required to obtain insurance coverage for mandatory items, including compulsory insurance policies. This includes cover for public building and contents, public liability, group life insurance for all categories of staff, and insurance for national monuments and historical sites.
NAICOM has further stipulated that all MDAs shall provide information to the commission on an annual basis regarding their insurance policies. In accordance with the premium collection and remittance provisions set out in the Market Conduct Guidelines, insurance coverage for an MDA shall only be provided on the condition that the premium is paid in full, on a No Premium No Cover basis.
To ensure that MDAs receive value for money in their insurance arrangements, NAICOM has stipulated that premiums must be paid prior to the renewal of insurance contracts. MDAs are also required to establish or maintain an insurance desk or unit that will be responsible for coordinating and managing their insurance policies.