Insurance firms’ accounts must be credible from 2012 on – Fola Daniel

As the nation’s insurance industry continues its transformation with strategic policies targeted at repositioning the sector to compete effectively with at least bigger markets across Africa, the industry regulators say they are stopping at nothing to achieve the set target. Fola Daniel, commissioner for Insurance in this interview with MODESTUS ANAESORONYE shares his thought on recent developments in the industry. Excerpts

What is the state of premium receivables in the 2012 accounts and compliance to date of the ‘No Premium No Cover’ policy?

Outstanding premium for the purposes of 2012 account is recognised to the extent of the ability of the insurance company to prove the existence of such. So it is not suffice to say that I have an outstanding premium of N2 billion or N3 billion, you have to prove it or where you are unable to prove it we remove it from the book. For the purposes of 2013 accounts, there is zero tolerance. There will be no outstanding premium at all because you are not supposed to do it.

Do we therefore assume that issues of outstanding premium and ability to prove they exist could have been the reason for delay in getting approval for 2012 accounts by most companies?

No, that is not correct at all because outstanding premium is only a single element in the whole accounts. I think what is causing a bit of delay is the conversion to IFRS. And you give us credit at NAICOM because as early as January 2011 we called all insurance chief executives, chief finance officers and their external auditors to a workshop and we had two other follow up workshops in 2011 and another one last year. And within the financial services regulators, NAICOM has been given the chairmanship because we are leading even the bankers in terms of IFRS.

Unfortunately, we don’t regulate the external auditors because many of them slaked so the accounts were being presented in a manner that was not compliant with IFRS. And you know that IFRS is not an option, it’s an imperative. There is no two ways about it, and there is nothing anybody can do than to follow the laid down procedure. I think what is key for us in NAICOM is that our financials beginning from 2012 accounts must be credible.

I don’t feel good as commissioner for insurance that a would-be investor from South Africa would look at our financials, throw it away and say it’s a joke. That is not good for us an industry. Our industry operates under the principle of utmost good faith and so every paper we have must be credible. So what we are trying to do is to ensure that there is 360 degrees credibility and that is what we will have. A few of the companies have improved and it will go round.

Given market reactions vis-a-vis the enforcement and compliance issues with government accounts, how would you access the ‘No Premium No Cover’ policy so far?

On government accounts, I think there is 100 percent compliance. The biggest test of ‘No Premium No Cover’ was the Nigerian National Petroleum Corporation (NNPC) account which generated over $70 million and that was paid. The effective date for NNPC account was April 1 and the premium was paid on 30th March. Is that not wonderful? So, I don’t know of any government agency or accounts in the offing that anybody would breach the law; so it’s working well.

An Insurance Industry Consultative Committee has just been inaugurated with terms of reference hinging on unifying and presenting a common front for the interest of the larger industry? What is unique about this body?

What we have done is similar to what the bankers have at Bankers’ Committee. The only difference is that Bankers are monolithic in terms interest groups; that is, there are no branches of banking sector. Banking is banking, whereas in the insurance industry we have the underwriters, the loss adjusters, the brokers and the reinsurers representing near different groups in the same industry. So the Insurance Industry Consultative Committee is to give a unified face and voice to the insurance industry. They will deal with matters that are strategic, things that will affect or likely to affect the insurance industry from a non bias point of view. They are not going to be acting like the Nigerian Insurers’ Association (NIA) who will want to protect all matters relating to underwriting or the NCRIB who will want to protect all matters relating to brokers commission.

So these guys will now align and look at issues on broader perspective. They are elders of the insurance industry who are looking at the health of the industry and where the industry should go. It is a strategic committee and I think it’s very good. In the past, we have had a little bit of misunderstanding among brokers and underwriters and a body of this nature will come in handy to resolve such issues in a way that it does not affect the interest of the industry as a whole and particularly the perception outside.

There has been issues largely described as attacks on the industry’s businesses which over time have taken away some of the businesses that were supposed to remain with the industry. Does this form part of what the committee would be addressing?

I think issues of such should attract the attention of the Committee and that is why I insist the chairmanship should be at the highest level of leadership of the industry. Happily, they conceded to that and the president of the Chartered Insurance Institute of Nigeria (CIIN) is the leader of the Committee. So, matters of that nature or anything that will erode the growth of the industry will attract the attention of the worthy elders and they will intervene to resolve such issues.

Sometimes, there seems to be a clash of interests in terms of responsibilities when it comes to registration and membership amongst the different arms of the industry including NAICOM so is it still within the purview of this committee to resolve such issues?

The role of NAICOM as the apex regulator is not in dispute. There is no dispute with anybody. NCRIB Act allows them to keep register of members and that is all. They don’t issue certificates that enables any broker to do business and that is within my domain.

Ikoyi Club for example, has a register of members and being a member of the Club, you pay a fee and that is what NCRIB is doing. NCRIB is a very good forum as far as I am concerned because it has made it easier for us to deal with all of them under one umbrella. They are over 600 and how could we have dealt with them one by one? So it’s a very useful body because we can relate with that body easier.