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Home Economy/Technology

Insurance: Number of unpaid claims worrisome – NAICOM

Insurance

The Matters Press by The Matters Press
November 30, 2023
Reading Time: 3 mins read
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2021 premium income for insurance industry hits N630bn — NAICOM

Lagos, Nov. 30, 2023: The Commissioner For Insurance, Mr Sunday Thomas, says recent efforts by NAICOM to review status of claims in the books of insurance companies and findings during onsite examination, reveals worrisome number of outstanding claims.

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The commissioner also charged Boards of insurance companies to support measures put in place by the regulator to tackle challenges of unpaid claims.
Thomas, also the Chief Executive Officer, National Insurance Commission (NAICOM) said this at the 2023 Insurance Directors’ Conference organised by the College of Insurance and Financial Management (CIFM) in Lagos.

The theme of the conference is: “The Board and Insurance Business Sustainability”.

According to him, the commission working with members of the Insurers’ Committee, have taken decisions and incepted measures designed to tame the menace of unpaid claims.
“We call on members of the boards of insurance institutions to support these measures by putting in place policies designed to tackle the menace.

“The commission will not hesitate to consider other regulatory measures to address the menace, ” he said.

Thomas highlighted some of the high-level issues observed by the commission during its just concluded fourth batch of the onsite examination of some insurance institutions, using the risk-based supervision methodology.

The commissioner stated that NAICOM observed that some insurance firms embarked on inadequate policies and procedural manuals, and in some cases, non adherence to these policies where they existed.

He said some of the policies were not reflective of the specific requirements of extant regulations such as the Prudential Guidelines and Market Conduct Guidelines, among others.

According to him, there is need for directors to improve their understanding of the requirements of AML/CFT particularly, the recently introduced requirements regarding proliferation financing in the AML/CFT/CPF regulations 2022.

“Also, inadequate risk profiling methodologies and practices, absence of policies to protect Chief Compliance Officers and Chief Risk Officers from intimidation and victimisation.

” Inadequate board compliance policies resulting in companies breaching extant laws and regulations with no consequential action by the board.

“Inadequate focus of boards on risks inherent in the core or significant activities insurance companies such as underwriting, reinsurance, claims, investment and information technology, among others.

“Under-trading as the ratio of capital to premium of most companies are below standard threshold.”

According to the commissioner, these issues require urgent attention of the boards by way of adequate policies to ensure proper guidance in order to ensure sustainability of insurance institutions.

Thomas noted that companies did not just die, people killed companies; as most of the issues that led to the collapse of companies resulted from governance challenges.

He said that NAICOM recently had to penalise some companies that had utilised unlicensed intermediaries in blatant breach of the Insurance Act 2003.

The commissioner stated that in recognition of the increasingly complex business environment, the commission had resolved to facilitate innovation and sustainability of the industry.

Thomas hinted that NAICOM had heightened its supervision and now focused on resolving broader policy challenges such as sustainability, climate risk and digitalisation, among others.

He said this would be done through regulatory policy initiatives that could facilitate the offer of essential range and variety of products and services that supported the Sustainable Developmental Goals (SDGs).

In a presentation, Dr Lucy Newman, CEO, Africa Private Sector Summit suggested that the board of insurance institutions should focus on efficiency, diversify revenue streams and invest in innovation.

Newman charged the insurance companies board to also engage with stakeholders, embrace sustainability and corporate culture, among other options to sustain their businesses.

Dr Elias Omondi, Principal Innovation for Resilience, FSD Africa, stated that there was need for sound insurance supervision to protect policyholders and insurance companies from going broke and paying fair claims.

Omondi charged managers and directors of insurance firms to adhere to processes of checks and balances, in line with corporate governance and Risk Based Supervision (RBS).

Dr Nosike Agoke, Member, Society for Corporate Governance Nigeria, advised that a third party independent body should be instituted to do the evaluation of the board of companies.

Agoke charged the board of directors to be more responsible in the discharge of their duties by effectively scrutinising agenda items brought before it for the first time before approving.

“It is unfortunate that the engagement the board has with its owners and stakeholders is minimal and tends to be reactive and defensive,” he said.

In her closing remarks, Mrs Yetunde Ilori, Chairman, CIFM thanked NAICOM for its support to organise an insightful conference for the directors and lauded the presenters for being exceptional in their deliveries.

Ilori also commended Mr Edwin Igbiti, President, Chartered Insurance Institute of Nigeria (CIIN) for allowing the college to enjoy a level of independence and micro manage itself.

No fewer than 150 board of directors of insurance companies and broking firms in the country attended the conference.

Tags: Insurance
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