Stakeholders seek end to regulatory bottlenecks undermining sectors growth

To achieve expected growth in the insurance and pension sectors and ensure increased value creation for consumers, stakeholders in the industry have canvassed for flexible regulations.

They believe that downplaying the bureaucracies that form bottlenecks to business expansion and growth will go a long way in assisting the sectors, and also attract new investments.

At the same time, they think that conflicting regulations amongst the different industries should be streamlined to un-burden operators and practitioners with the growing challenges of compliance.

These were the observations of Stakeholders at the 2nd National Conference on Insurance and Pensions organised by the National Association of Insurance and Pension Correspondents, (NAIPCO) held in Lagos, with the theme ‘Legislation of Insurance: Intrigues, Interest, Governance and the People’ held in Lagos.

Dele Fajemirokun, foremost industrialist and former Chairman, AIICO Insurance speaking at the event called on insurance and pension regulators to tone down on the guidelines meant to supervise the sectors.

He said for insurance and pension industries to move forward, there was need for bureaucracy to be eliminated and reduction in rules, to those that favours opportunities to generate funds.

According to him “there is need to avoid complexity in regulation with a focus on judgment-led regulation instead of rules-based regulation.

Fajemirokun said over the years, the political desire to regulate an industry tended to ebb and flow in response to the opposing pressures of public disquiet about the industry problems and the industry’s concerns over-interference in the way it carries out its activities.

“The regulated firms in insurance and pensions say they do not object in principle to being regulated, but there are frequent and vociferous complaints from them, and indeed from the public, about how regulation is being applied in practice, either it is too strict or not strict enough depending on their perspective,” he said.

Fajemirokun said the basic question that should be asked is how effective is regulation in achieving its purpose, which is creating and maintaining the effective and efficient insurance and pension market.

He further said there should be joint thinking, transparency, fairness, while addressing issues like bureaucracy, pull me down syndrome prevalent in the third world, complexity, over prescriptive leading to compliance fatigue and cost of compliance.

He, however, commended the National Pension Commission (PenCom) and National Insurance Commission (NAICOM) for working together over the years especially in developing joint guidelines on annuity for the insurance industry.

He urged them to keep working together to ensure that both industries grow, and that their vulnerable customers are treated fairly as they exercise their right to choose the retirement solution that meets their needs.

The industrialist advised that the insurance and pension industries needed to keep investing in capacity building initiatives especially in support of actuary students, adding that both industries, together, must accept the burden of responsibility for drawing attention to care for the elderly in our midst.

Mohammed Kari, commissioner for Insurance and CEO, NAICOM said topic is apt and in tune with prevailing discourse in the industry and more imperative in view of the challenges being faced on the road to amending the Insurance laws to conform with the ideals of contemporary insurance practice for efficiency and effectiveness.

He said it is pertinent to note that the insurance industry needs laws that conform to modern practice and laws that takes into account the potential role or impact of insurance on policyholders, insurers, regulators and government. “With society facing huge challenges, the role of insurance becomes ever more vital.”

According to him, the insurance industry has fallen victim to legislations over the years and the scars have remained very visible to date. “In recent years, we have had legislations in Nigeria which have in advertedly inhibited the growth of insurance and its contribution to the nation’s Gross Domestic Products.”

“Only a few years back, the workmen compensation which is a product of the insurance industry anywhere in the world was severed by legislation, notwithstanding the resistance and position of insurance operators to the new legislation. The conflict of interest created by that legislation still lives with us. Of course, we are aware of the legislation that equally severed pension from insurance.”

Kari said in spite of the good working relationship that exist between us and our pear regulators – PenCom, CBN, SEC, NCC, etc, there exist conflicts created by legislations in certain areas where interpretations of sections of the law is viewed differently. In the implementation of these legislations, regulators whose duty is to implement the provisions of the law rely on their respective interpretations which often creates conflicts and lead to impasse between regulators.

“The sad truth is that while the regulators bicker over whose interpretation of the law is superior, the consumers of these products and the operators suffer. In the process, lives, income and businesses may be lost. No thanks to certain legislations that overlap and seemingly look ambiguous and almost impracticable.”

He however advised that financial agencies with conflict over interpretations of legislation should in the interest of consumers approach the FSRCC for amicable resolutions rather than allow legislations destroy the mutual relationship that exists between them.

Folashade Onanuga, director general, Lagos State Pension Commission, (LASPEC) on her contributions called on Pension Fund Administrators (PFAs) and life insurers to work together to build a virile pension industry rather than fighting one another in a bid to retain market dominance.

Onanuga said the competition between the two operators must be healthy to build confidence in Pension Reform Act (PRA).

She said: “The competition between the two operators must be healthy, otherwise, the ultimate consumer will lose confidence in the transparency which the PRA advocated, as human thinking will suggest that the infighting to gain upper market share, between the two operators means that the product being sold is more to the benefit of the operators than the ultimate consumer.

While marketing annuity or programmed withdrawal products, Onanuga said PFAs needed to understand that they don’t have a monopoly over the business, but should rather work with annuity service providers to boost the pension industry.

She advised that the National Pension Commission (PenCom) and the PFAs should be able to display the list of annuity service providers on their website while annuity service providers should also be able to display similar list on their website.

“Marketers of both industries need to be sanctioned where they have been accused of de-marketing, whilst sharp practice by any employee aimed at boosting market share should be exposed and appropriate punishment meted out,” she added.

Modestus  Anaesoronye