NAICOM moves to protect local insurers on offshore risk placements

Determined to ensure development of local capacity and compliance on national content development, industry regulator, the National Insurance Commission (NAICOM) has issued a directive requiring operators to get its approval before any placement of risk off-shore.

In this vein, the Commission states that all insurance institutions are required to ensure that Nigerian Insurers, Reinsurers and Pools (in the Commission’s records) must be offered and allowed to willingly decide the proportion of the risk they wish to accept (subject to their respective capacities), before any application for approval for offshore placement of the excess.

“All recognized reinsurance treaties/arrangements and additional capacities offered by Local Reinsurers/Pools must be fully utilized before excess consideration for offshore placements; and all off-the-system or informal directives to coinsurers, local reinsurers and pools to accept lower than their desired available capacities are hereby prohibited.”

Please ensure strict compliance as we would not tolerate any breach of these directives. Failure to do so will henceforth result in the imposition of appropriate regulatory actions as well as declinature/ rejection of such requests, the Commission.

NAICOM in circular issued to all insurance operators in the country with the theme “Utilization of In-Country Capacities of Nigerian Insurers, Reinsurers and Pools Prior to Foreign Facultative Reinsurance” reads:

“The attention of the Commission has been drawn to recent practices in which insurance practitioners fail, neglect or refuse to consider and fully utilize relevant in-country capacities of insurance/reinsurance institutions such as pools, reinsurers and other approved local/recognized insurance capacities, prior to applying for approval to cede certain proportion of some risks offshore. In some situations where the pools, insurers or reinsurers are offered participation, the institutions are offered minimal proportion below their capacity or informally restricted and/or compelled to accept lower than their respective capacities for the purpose of justifying cession of the risks offshore.”

Additionally, the Commission has observed that some Insurance Institutions have inappropriately arrogated to themselves the authority to unilaterally exclude some insurers over alleged outstanding claims. It has therefore become imperative to remind all insurance institutions that they are required to report any alleged non-settlement of claims to the statutory grievance/complaint redress mechanisms (the Commission’s Complaint Bureau) for appropriate action prior to determination of their participation as contained in the circular entered on 13th January 2015.

Please ensure strict compliance as we would not tolerate any breach of these directives. Failure to do so will henceforth result in the imposition of appropriate regulatory actions as well as declinature/ rejection of such requests, the Commission stated.

Modestus Anaesoronye