NAICOM tightens noose on brokers’ returns to check system fraud

Determined to check abuses within the system, particularly on issues bothering on overriding commission, unremitted premiums, compliance with International Financial Reporting Standard (IFRS) among others, the National Insurance Commission (NAICOM), the nation’s insurance industry regulator, has issued a new returns format to insurance brokerage firms.

The directive, which commences April 1, 2015, would require that brokerage firms notify the Commission their business transactions as they occur, monthly, quarterly, bi-annually and annually, such that NAICOM follows up with the remittance process with respect to premiums collected.

This development analyst say would check premium fraud in insurance arising as result of policy manipulations as well as withholding of premium, a problem that has been linking to insurance brokers.

According to a document accessed by BusinessDay, NAICOM stated that in furtherance of the commission’s determination to enthrone regulatory clarity particularly with respect to regulatory returns requirements, it became imperative to harmonise the processes of obtaining various returns from insurance institutions.

“Accordingly, the attached schedule of harmonised returns has been categorised in accordance with the regularity of the returns (i.e on occurrence, monthly, quarterly biannually and annual basis.)”

The circular signed by Nicholas Opara, director, supervision, NAICOM further noted that this does not preclude the brokerage firms with other regulations and/or additional returns requirements as may be required by the commission from time to time.

NAICOM lamented recently the slow pace of compliance with IFRS by insurance brokers, stating that it could affect them in qualifying for bid for certain classes of government business.

Okpara, who spoke during the opening ceremony of an IFRS Seminar organised by the Commission for insurance brokers in Lagos, said that as at the end of February 2015 only 200 broking firms out of over 500 have submitted their 2013 financial accounts. Out of this only 54 had received approvals.

Okpara also said that the situation continues to worry the Commission despite all its efforts to educate them with so many seminars and workshops over the last three years.

“This is not the first time we are organising this kind of programme for them. We had earlier held similar programmes, gave them a uniform template to adopt, and we keep receiving some kind of documents that gives course for worry,” he said.

According to Okpara, “This is 2015, we have not received many of their 2013 accounts; those submitted are nothing to write home about, meaning that they will not have their license approved, accounts to bid for businesses this year.

The NAICOM boss expressed worries that on most of the IFRS training programmes, you see CEO’s attending instead of sending their accountants and auditors whom the programme is meant for.

“When CEO’s attend programmes meant for their staff, it becomes misapplication, waste of time and the aim is defeated because they are not the people to prepare the accounts.”

At the moment, NAICOM is at crossroads on how to enforce IFRS compliance among broking firms.

IFRS are a set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS are issued by the International Accounting Standards Board and the goal with IFRS is to make international comparisons as easy as possible.

Modestus Anaesoronye