Nigeria’s Commissioner for Insurance, Mohammed Kari has blamed inappropriate laws, which often brew disharmony among the industry’s regulatory agencies, as one of the greatest challenges facing the sector.
Kari insists that if the insurance industry must grow, it requires those laws that conform to modern practice; and those that take would into account the potential role or impact of insurance on policyholders, insurers, regulators and government, stressing that as the society faces huge challenges, the role of insurance becomes ever more vital.
Represented by Mr. Pius Agboola, Director, Authorization and Policy in the agency, at the 2nd National Conference on Insurance and Pension, organized by the National Association of Insurance and Pension Correspondents (NAIPCO), in Lagos, the commissioner said, “Suffice it to say that our experience with insurance legislations in Nigeria could best be described as sweet and sour.
The insurance industry has fallen victim to legislations over the years; and the scars have remained very visible to date. In recent years, we have had legislations in Nigeria which have inadvertedly inhibited the growth of insurance and its contribution to the nation’s Gross Domestic Products.”
According to the commissioner, “Only a few years back, the workmen compensation, which is a product of the insurance industry anywhere in the world was severed by legislation, notwithstanding the resistance and position of insurance operators to the new legislation. The conflict of interest created by that legislation still lives with us. Of course, we are aware of the legislation that equally severed pension from insurance.”
He said, “In spite of the good working relationship that exist between us and our pear regulators – PenCom, CBN, SEC, NCC, etc, there exist conflicts created by legislations in certain areas where interpretations of sections of the law is viewed differently. In the implementation of these legislations, regulators whose duty is to implement the provisions of the law are wont to rely on their respective interpretation which often creates conflicts and lead to impasse between regulators.
I must say here that NAICOM has had its own fair share of this organised confusion in the past; and recently with the PenCom over the issue of Custodians for annuity funds where the two Agencies have both relied on their respective interpretations of the same legislation.
Kari, however, stated that in the meantime and within the ambit of the existing laws, the commission has widened its regulatory and supervisory roles on insurance entities with the aim of building the trust and confidence of policyholders and at the same time promote the safety and soundness of the insurance industry., assuring that, “We will continue to work closely with the industry and other stakeholders, especially co-regulators in the financial services sector to promote a healthy insurance industry in Nigeria within the existing legislations.”
He said that the last decade has witnessed a significant wave of reforms governing the regulation of financial services across the globe; and that then Nigerian insurance sector in particular has been rapidly evolving towards more risk-based requirements for capital, accompanied by an increased emphasis placed on internal risk management processes, structures, and controls with an increasing emphasis on qualitative elements with respect to risk management and risk-based supervision.
“As the economic power of private sector business continue to grow, so also the number of laws regulating business activity. In broad terms, these laws typically serve one of two objectives: to promote market competition and control the market power of financial institutions over customers, or to mitigate the adverse effects of business activity on individuals and other organizations,” he said.
Stories: Bonny Amadi