NAICOM to stop firms with solvency gaps

Determined to protect investors and policy holders in insurance, industry regulator, the National Insurance Commission (NAICOM), says going forward it will no longer allow companies with solvency gaps to operate in the market.

The commission said invoking excuse that firms lost major part of their investment capital during the 2008/2009 capital market crash would no long be an acceptable one.

Fola Daniel, commissioner for Insurance, gave the warning during the investiture ceremony of Godwin Wiggle as the 21st chairman of the Nigerian Insurers Association (NIA).

Daniel stated that the commission had chosen to show some understanding against the backdrop of massive investment losses following the capital market crash of 2009/2010.

“Whereas other sectors have achieved reasonable recovery, insurers and NAICOM may no longer be able to invoke the excuses of the market crash as justification for the poor turn of event”, he said.

The commission shall therefore have zero tolerance for solvency gaps in the ensuing year in the interest of the insuring public and for the avoidance of exposure of NAICOM to regulatory risk, Daniel noted.

Daniel observed that enforcing this regulation has become necessary, because from the audited financials of nearly a dozen insurance companies, solvency gaps are recurring features of their activities for as much as three consecutive years. “Appropriate regulation should have resulted in either suspension of the operating licence and possibly withdrawal.”
The commissioner also frowned at the late submission of annual returns by insurance companies, adding that it shows that either the company is lacking integrity issue or they are withholding some information to the public.
He noted that going forward insurance companies must comply with all requisite regulatory requirements without plea subsidies from the commission, urging the new chairman of NIA to instill discipline among its members.