‘Compliance with IFRS has reduced market development threats’

The nation’s insurance industry in 2013 passed through a critical phase in transformation, that elicited regulatory tightening including ‘No Premium No Cover’ policy as well as compliance with IFRS accounting. Fola Daniel, commissioner for Insurance in this interview with MODESTUS ANAESORONYE, shares his thoughts on the activities of the industry last year and expectation for 2014. Excerpts:

What was 2013 like in terms of business performance?

It would be too early to begin to measure last year since full year returns of the companies have not reached the Commission to be able to give specific figures on performance for that year. Instead, we can be able to measure last year up to the third quarter. And I can confirm to you that most of the fears that there would be loss of business as result of ‘No Premium No Cover’ policy did not happen. Last year, I think we posted a result that is significantly better than the previous year.

What would you say were the challenges, which the Commission had to face in 2013 in the course of industry supervision?

The major challenge we faced was the frustratingly slow rendition of annual reports. I call it frustrating on the background that more than any other financial services sector regulator, we prepared our constituency very, very well. We started three years before the take-off date.

We conducted conferences, seminars, workshops, opened help desk office in Abuja. And also we did a five page document which talks about common problems that could confront operators in the course of preparing their accounts and all of these we expected will manifest in accounts being rendered timely and in compliance with International Financial Reporting Standard (IFRS), but unfortunately that wasn’t the case.

But, I think I am happy to say that last year was like a test case, and we expect that this year many companies would turn in their account much early. I am glad to also know that as we speak now, some insurance companies have already admitted external auditors into their premises auditing their accounts of 2013.

So, it means that we are not going be slow in submitting reports this year. Submission of reports is not just for regulatory purpose, it is also for commercial purposes because most of these companies are listed and there are listing requirements. And so you cannot be submitting your accounts nine months after the end of the year. That is not compliance, and I wouldn’t want to see as commissioner for insurance that only insurance companies out of other listed companies are not turning in their reports. I am optimistic that 2013 would be a lot faster than that of the previous year.

Looking at the business environment, what would be your expectation in 2014?

I think 2014 promises a lot of excitement. Last year, we released guidelines on Microinsurance and guidelines on Takaful and these are new opportunities for insurance companies to grow their business if they can harness the opportunities available in them. And I am quite happy that a lot of enquiries were being made for those who want to be on standalone microinsurance companies and Takaful, in addition to existing companies. If you want to know, we have received more than 25 enquiries.

NAICOM, had the previous year identified some market development threats;how do you intend to tackle them this year?

Well, the problems are receding because by the operation of IFRS, certain elements that were problems prior to 2013 are no longer going to be problems. The IFRS was an opportunity for extra compliance and for any accounts submitted and passed you can be sure it has complied. So, some of the problems had listed as continuing problems has been reasonably reduced.

Majority of the companies that are yet to get approval of their 2012 accounts have some kind of unique characteristics, so what would that be meaning?

Those that have not received approval means their financials are not ready for approval. Like I have repeated everywhere; we are not going to rubberstamp any financial. Any financial that passes under our signature must be a credible document, so there are a few companies whose accounts are under scrutiny.

We are resolving and giving approvals to quite a number of them on daily basis. But they are just very few that still have some issues which they are dealing with and we have communicated that to them. And as soon as they make amends as highlighted we pass them.

You met with the Nigerian Insurers’ Association (NIA) weekend and this has become an annual ritual, what is topical in that meeting?

My meeting with them is a yearly routine and it affords the regulator and the operator the opportunity to take stock of the previous year and also strategies for the New Year. That is exactly what we have done, to look at what happened in the insurance industry last year and know how it will help the industry in the current year; what events of last year were inimical to the growth of the insurance business. When you find out all these, then you try to strike a balance.

Now, what is NAICOM’s new policy direction in the New Year?

We are going to be more stringent because our focus this year is consumer protection. Primarily, the responsibility of the NAICOM is to protect the policyholders and we are going to be stricter about customer protection. We are going to have zero tolerance for delay or non-payment of claims. And I can tell you that from my discussion with NIA we are pursuing the same objective.

The NIA has set up the consumer complaint bureau similar to what we have in NAICOM and we have exchanged note. And we have discovered that there are some cases we are handling in Abuja that could be handled at the NIA level for quick resolution since we are on the same page.

The objective is the same. So, what we have decided is that, cases that are below the line we pass to them and give time frame to resolve it, and the once that got to them that requires regulatory touch we take it from them and decisively deal with it.

The oneness of purpose is that customers buying insurance deserve the service promised under those contracts and we are going to see that it’s achieved. We are also going to be serious with market discipline. We are not going to tolerate charges that are not recognised by law. What is recognised by law is insurance commission for brokers and for agents and anything outside what the law recognise we are not going to accept it. That we have made very clear.

This year, we are not expecting that NAICOM would get budgetary allocation from the federal government following the Commission’s request; what is the position now?

I think we made our position clear last year. We recognise the fact that government has enormous financial responsibility and we are saying, as a regulator that is generating some money, we can be part of the body resolving the problem of government by not letting them carry our luggage.

We made that proposal and if it’s accepted there will be zero allocation to us and we would have helped in one way or the other in helping to resolve government’s problem.

And the money that would have been allocated to us could be channelled to other areas of need. That’s our position. But government will have a final say, so I don’t know what the position is and I am yet to see the appropriation bill to know if anything is allocated to us or not.