We are committed to redefining insurance practice in Nigeria – Kari

The nation’s insurance industry is going to transformation with a lot of policy guidelines, which not only will impact on operations affect leadership both at board and management levels. Mohammed Kari, commissioner for Insurance in this interview with a select journalist shares his thought on the Commission’s plans and strategies. Modestus Anaesoronye was there. Excerpts

What is your agenda for the Insurance industry?

The plan of the new management going forward is to continue all the initiatives that had started which, for one reason or the other, have been delayed or were not properly implemented. The Market Development and Restructuring Initiatives (MDRI) is an initiative we would continue with, because it was designed to help the penetration of insurance and we can still do a lot on that. What we have done to strengthen the implementation is to set up an internal unit that is specifically assigned to handle public sector insurances and advices.

To this end, we have issued a circular to all Ministers; Department, Agencies, the Head of Service; Secretary to the government; Permanent Secretaries; Head of MDAs, including the Chief of Staff to the President, highlighting to them the role of NAICOM in ensuring that public assets are insured properly.

The unit will assist the MDAs in structuring their insurances properly. We have given them a template on information to give and we are going to work jointly with the Minister of Finance and the Budget office to ensure that these assets, when identified and valued appropriately, are provided for in the budget and paid for the purpose of insurance.

On other classes of business, we are working with the Federal Road Safety Corps (FRSC) on motor insurances; we are also working with the Fire Brigade on public buildings. These are initiatives that would help penetration and we are making efforts to ensure that these initiatives work.

What is NAICOM doing to ensure that state governments comply with group life policy?

Group life is one of the seven compulsory insurance classes. We have a joint committee with the National Pension Commission (PenCom) for the enforcement of group life cover. We are taking an initiative to enforce it. As I said earlier, we have created an in-house committee for the enforcement of compulsory insurances and management of public insurances. The committee is liaising with the government officers to ensure compliance. We are making sure the laws are enforced. Look at the pension, which came out of insurance, but due to enforcement, it is making some remarkable progress.

Can we know NAICOM’s position on tenure for managing directors?

We issued the code of corporate governance guidelines, even, before the banking sector. The code of corporate governance for the insurance sector was issued in 2009, and the bankers have enforced theirs.

At the Insurers’ Committee meeting we held in Lagos, we agreed that the code would be implemented by April 1st. The code was silent on the tenure of executive managements, but very clear about non-executives. So, we have as at April 1st, implemented this. The exposure draft we released, that contains the second level, which is the executive management and other requirements, was downplayed because a week after we released the draft, the Financial Reporting Council (FRC) released another one which applies to all operators in the financial sector. So, we decided to wait for the implementation of theirs. But if theirs is taking too long to come out, we will review ours and continue with it. But the aspect of limited tenure for executive management is vital.

In all economic plans, including the developed countries, after the financial crisis in 2008, it was realised that it was the stay-put of managements that caused the crisis. It is the interest of investors to have succession plans in whatever one does. The time proposed in the draft is reasonable for anybody that has served twice to leave. We have always argued that we do not have capable persons to take over, but whose faults it is? It is the fault of the Managing Directors who failed to train those below them. Why don’t they create executive structures, to groom their successors? There should be somebody capable to take over a company at any time.

Would NAICOM consider the forensic report on Goldlink Insurance?

The investigation reported at the company’s Annual General Meeting (AGM) was a very good exercise, and they found issues that need to be handled further. If the board, which spent all its time on investigation, could not take the issues to the next level, then, it is for us, as a regulator, to look at another way of concluding the exercise, and we are looking at that possibility. And part of it is the appointment new interim directors to conclude the exercise.

What is the state of Microinsurance and Takaful insurance?

We have, at the first level of implementation, allowed Microinsurance and Takaful Insurances to be sold through windows. The next level is to see if we can let them stand alone, and we are in the process of reviewing the guidelines for microinsurance and takaful. For micro insurance, we have nine companies that are presently selling the product through the conventional access and we have three firms selling takaful products through windows.

We have got applications for stand alone and one of them had been published and the second one has just been interviewed. We have also published one takaful licence. What we are trying to do for the special classes is to see if we can stagger the licence. This is because what our law provides, for now, is just a licence, which, by implication, is just a national licence or a licence that gives operators access to operate anywhere. And with paid up capital of N200 million, most operators may not be able to operate in more than two units.

We are encouraging investors to come and get smaller type of licence that will enable them operate in small areas. We hope to bring down the licence fee and issue people licences to operate either on national, state or as a unit. An operator could be issued a licence to operate within a market that would enable the operator to be close to the consumers. We are looking at this as a way to increase participation and deepen the market.

This is an area where professionals that are in the wrong side of the business can move into. But they can use their professionalism now and have this single digit unit or two to three units at the local government and run them more successfully, and have better cash flow than what they are doing now. We believe the microinsurance and takaful sectors can absorb a lot of professionals, because even before one operates there, he must have certain level of professionalism.

Don’t you think the present economic situation will affect government insurances?

Government agencies cannot shelve insurance because it is a recommendation of the law. The Ministries, Departments and Agencies (MDAs) have the responsibility to protect government’s assets; hence, they cannot shelve insurance. Government, being the owner of the law, cannot default. It is not in the interest of other consumers to see that government fails to insure. So, government will do everything it has to do to ensure it protects public assets.

For instance, my responsibility as the chief executive of NAICOM is to ensure that I abide by all the laws of Nigeria and ensure the enforcement of all the laws, whether they are my responsibility or not. Sometimes, operators take it unkindly when I ask them questions that are not insurance-related. I do ask companies if they are making returns to the Corporate Affairs Commission (CAC)? They may ask; what is my business with their returns? If I licenced a company, it is my duty to ensure that it obeys the laws of Nigeria. It is my business to ensure that companies pay their taxes and meet the requirements of other regulators. So, it is interwoven, and I cannot see any responsible officer sitting on top of an MDA and say insurance should be relegated. We are trying to sensitise them not to do so and we are arranging a retreat for top level officers to appreciate their responsibilities under the insurance market.

Modestus Anaesoronye