Commissioner for Insurance and Chief Executive, National Insurance Commission, Mr. Mohammed Kari, in this interview, reasoned that the agency has not been given a fair opportunity to provide expertise to government on insurance matters. He also discussed among other things, recent policy initiatives aimed at correcting the negative perception of the sub-sector and how to restore consumer confidence in insurance practice. He spoke to James Emejo. Excerpts:
Sir, how relevant is the insurance sector to the present administration’s development agenda?
The insurance sector is indeed a key component of the Nigerian financial system considering that in most developed jurisdictions, the insurance sector accounts for a significant portion of the economy. As an emerging and transitional economy and in line with the change agenda of the Federal Government, the relevance of the insurance industry becomes more critical as a provider of capital, employment and security. As the country’s economy continues to develop, and with the attendant risks involved in economic expansion and growth, it is indeed imperative to consider the role of insurance as an important determinant to progress and development.
The Nigerian Insurance market in recent past had undergone substantial structural and regulatory reforms following the market intervention and the evolution of Nigeria’s financial sector in the last decade.
Most MDAs are accused of violating the position of law in taking up insurance cover. What are your efforts to have public institutions comply with existing insurance laws?
First of all, I think the MDAs are not appreciating the position of the law and so what we decided to do initially was to make them aware and to make them aware, we have selected certain stakeholders in government and business to emphasise the need to inculcate the culture of insurance. And we’ve selected certain stakeholders in government to visit them and explain to them the role they’ll play in getting MDAs to appreciate; the role we play and to ensure that they comply with the provisions of the law. We know they have challenges of financing their insurances-that is not within their control but what we do not appreciate and what the new government has spoken against is that impunity of doing things the way you want and not the way it should be done.
And we’ve found out that a lot of MDAs do take up insurance improperly and improper insurance placement is a waste and makes the regulation of the industry very difficult for us because if the terms are not professional terms, when there are claims, there’ll always be problems. It exposes the provider of the insurance or the intermediary in this case as to their responsibility and so that’s why we’ve made the policy of going round to the major stakeholders explaining to them what need to be done and seek their cooperation in ensuring that going forward, things are done properly.
The commission on its own has taken a drive to visit stakeholders especially in government of now to sensitise the need for insurance and for the service to appreciate insurance. We’ve already visited offices like that of the SGF and we have an appointment with the office of the Head of Service next week; we’ve visited big consumers like the Nigeria Customs Service as you can see in the media and that’s the whole effort to try to make them understand and appreciate what insurance can do for them and what their responsibility is in the law and it is a common statement we hear everywhere we go-that they don’t have insurance expertise which makes us wonder then how are these billions of Naira of premiums placed every year if the consumer doesn’t have the expertise. We would be comfortable for the consumer to have someone who will guide him properly rather than allowing the provider of insurance to do the guiding because definitely, there’ll be opportunity to compromise the situation when you have the provider dictating the terms and NAICOM is very concerned with the kind of contracts we see out there which in most cases are tailored by the providers or the intermediaries in this case without looking at the proper interest of the consumer-government in this case. But government has initiated efforts with us also to identify the issues government needs to address to ensure that the insurance culture is properly imbibed in their affairs; to advise us also on how they can fund and ensure the money goes to the purposes provided for.
Could you put a financial cost to the violation of due process in insurance administration by government agencies?
Well, we don’t only see it in that perspective alone, that, I think is for the industry to sort out-we don’t sell insurance services but our concern as an arm of government is to ensure government assets and interests are properly secured, first and foremost. And when we do, automatically, the rest follow. If we sell to government, the need to take protection, they’ll take it from the industry and the industry will benefit from that. Now, what our plan is, having laid the foundation from the government side who is a consumer, the industry starts to benefit automatically.
How relevant is the Office of the Secretary to the Government of the Federation (SGF) in influencing compliance with insurance regulation in MDAs?
I recently had a one-on-one enlightening meeting with the permanent secretary, Common Services Office (CSO). The office I think has a dilemma and this is typical of all MDAs when you check with them. Here, you have an outfit which buys a product from the industry-a professional product but they don’t have anybody who is an insurance professional in the office to ensure it is done properly. Definitely you are going to have problems.
In most of the MDAs, they don’t have anyone who knows anything about insurance, yet you see adverts in the papers selecting insurance intermediaries and companies. Yet somebody processes premium payments and claims and so there must be problem.
Insurance has not been given a fair chance to provide service to the MDAs. The position of insurance in all the MDAs has been relegated to ‘anybody can do it’ kind of thing. You go to an insurance desk and you find somebody from a different background, not an insurance insurance background, so definitely, that’ll cause problems. So everywhere we go, we preach that MDAs realise this is a professional task and professionals should be employed to do the jobs. You find all professionals from different filed handling insurance because everyone takes it for granted.
Now, to assist MDAs in taking a quantum leap, we are going to come up with an advisory circular to MDAs on what they need to do but first of all, we are going to collect data from them to find out what is it that they insure, what is their value, who it’s insured with-and we have data of every operator in the industry. We have the liberty to advise government not to deal with this insurer or this intermediary because of their track record and if it’s too bad, we would stop them from operating. And if not too bad, we put restrictions; we know all these things but government doesn’t. In most cases, you find an MDA writing us after it might have closed a business to confirm whether an insurance company is licensed. This is not good enough. The job is not that simple for everybody to undertake, it just needs technical and professional hands which we are ready to provide.
What are your expectations from the newly constituted cabinet/economic team?
Well our expectations like any Nigerian is very high. We are expecting them to be magicians, we are expecting them to turn things around overnight, to perform some wonders but the reality is far away from what we expect. The reality include that they haven’t understood what they are called into and they are planning a way to get us out from where we are and I believe they have the ability to because the team looks very sound in both the civil service level which is the permanent secretaries and at the ministerial level too and I believe it would go a long way.
As far as the composition of the ministers is concerned, you can see a lot of professional have been brought into this level of service and interestingly, people have been merged where they best fit. And the president rightly used a terminology that he’s put every round peg in a round hole and I believe him because he has taken his time, he’s selected the people he needed to select and gladly to also observe that all of them had been able to pass their confirmation stage without any problem-though some with some problems initially, but they’ve been able to pass through-which is also a sign on the quality of the president’s selection. So we’re now getting up to identify how we could work with them, how we can contribute our own share. And we are looking at it from the contribution of the whole insurance industry because we have a role to play; we’re the next growth sector in the economy-actually, the only growth sector in the financial sector.
Against the backdrop of some insurance operators running to the minister to evade compliance with industry policies aimed at reforming the sector, what is your level of cooperation with the ministry of finance?
The ministry of finance has always assisted NAICOM because we report to them all of our affairs and we seek approval from them when we require certain services especially in the absence of the board. Now, we are an arm of the ministry and we are a full time regulator. We don’t expect to do everything from the desk of the minister. We have our statutory law that says we can do this and that. So it is in the interest of our operations and also in reducing the pressure on the minister to go ahead and do what we have to do but only seek the support of the minister where the MDAs refuse to cooperate with us or where the industry is difficult. In a political situation like we have, it’s not unexpected to have operators running to the ministry to go above us to argue something which the ministry is not well informed about. For example, if we want to discipline an operator, typical in Nigeria, the operator will run to the minister or ministry before us and give a wrong impression of his case before we get to the ministry.
But thank God we’ve had an external relation with the ministry, they’ve always forwarded cases for our comments or always referred it to us because we the professional side of them. They always refer to us to treat it as required by the law and we’ve not had any problems on that. So I will not be surprised if players in the industry especially at a time when we are trying to force change will be running over to the ministry every now and then to go and paint a wrong picture but we’ve had a very good relation with the ministry, they’ve always sought our position before taking any action.
What are the challenges and way forward for the insurance industry particularly, the public sector?
It is given that there are challenges in every undertaking in life, and while the Insurance industry accepts it challenges and undertakes to wrestle them head on, there is need for the biggest stakeholder-government to partner with the industry more, going forward. Government’s general attitude to insurance has to improve. There is low patronage of insurance by government and its agencies and the lack of effort to protect public assets. Even when it does, the funding is haphazard. It is common knowledge that the ability of government to replace damaged or lost asset is not as sound as it used to be as such insurance is the best alternative to no protection at all. Employees, especially our gallant forces fighting in security challenges need to have the comfort of insurance protection as they confront their duties.
There is an apparent lack of Insurance expertise in the civil service as such government is not guided properly internally as it ventures to deal with the industry. The position of insurance is virtually non-existent in the civil service’s scheme of service, for the few insurance professionals are not placed properly to play their professional role. The industry has been yearning for a review of the Insurance laws in the country, to these end an insurance bill was drafted and submitted to the Ministry of Finance with the full involvement of all stakeholders. Almost five years later nothing has been heard of it. We strongly solicit the Minister to see to the process and enactment of this law, so as to enable the industry play its rightful part in the developmental programs of the government.
Also, the industry has complained of excessive and supposed unfair assessment modalities being used by tax authorities for tax computation of its finances. We plead with the new government and the tax authorities to pick interest on this and continue with the engagement with the industry to find lasting solution to this problem, so that the industry can play the expected role of investible and developmental fund provider for the Nigerian economy. The Nigerian insurance industry stands to play a major role to national development if the needed attention is accorded it by all stakeholders.
What do you seek to achieve with the recent inauguration of the Insurers’ Committee in the industry?
Well, our overall vision for the Insurance Industry is to significantly increase insurance contribution to Gross Domestic Product (GDP), deliver jobs in this industry, and widen access by growing the number of insurance policyholders in the country. You may all recall that at the Insurance Industry summit held in December, 2014 the then Minister of Finance proposed a four-point plan for the industry which included the Ennforcing “public interest” (compulsory) insurance; delivering jobs and skills training, building consumer trust and public awareness and increasing access to insurance. These plans were re-echoed at the last Mega conference of the Insurance Industry Consultative Council (IICC) held in July this year. Our goals are therefore laid out from the resolutions of these conferences. This committee will help to rediscover ourselves and to reinvent insurance business in the light of the current world realities.
So we have inaugurated the insurers’ committee where the chief executive of the market-of insurance companies will be meeting on monthly basis with us to find out ways which we can support ourselves, develop the industry, improve on penetration and also see how the industry can come and be a partner to government in achieving the policies of government. And the policies of government are far away from profit making, which seems to be the idea of the insurance industry-they just think they’re in business to make profit. But we’ve to provide some corporate social responsibility as a corporate entity.
Not long ago, the CBN and the Bankers’ Committee donated a huge sums of money to the displaced people who are victims of the insurgency and I think each bank contributed about N250 million-that’s a lot of money. It will help a lot in settling some of the displaced persons. What has our industry done? It’s in gatherings like this that we can lay down the issues.
Now, government has harped on the need to create employment to help the youths who are unemployed-what is our industry going to do about it? These are some of the things we have to address as a body, as an industry but we as a regulator have to guide the providers because at the end of the day, they are the beneficiaries of these policies when they are properly established and it would ultimately translate in increased penetration of insurance in the industry.
Therefore, the Insurers’ Committee will provides a platform for all chief executives of insurance companies in Nigeria to sit with the regulator to discuss issues affecting the Industry and proffer steps on developing the business of insurance with the goal of having an effective, efficient performance and improved contribution to the GDP of the nation.
The committee secretariat will be housed in NAICOM and membership consists of NAICOM and all insurance companies represented by their chief executives and all market associations represented by their leadership. The committee shall meet in Lagos or any other place to be decided to discuss special agenda and any other businesses. The committee has also agreed to have extra meetings as may be agreed for specialist meetings and wold have an annual retreat at the end of the year to discuss plans for a new year as it approaches.
Since assuming office, what efforts have you made in trying to restore consumer appetite in insurance products?
If you remember early in the new year between February and March, we did a publication and requested for all the consumers of insurance who have problems of the insurance providers to write in and we got quite a lot of complains, most of them to do with claims settlement or rejected claims and we adjudge on the matters and majority of them have been resolved amicably by in some cases, the insurance companies admitting liability where they had denied earlier and by the consumer also realising he doesn’t have a claim as he thought he had because some of these bad publicity is based on perception.
You find the majority of people that tell you insurance is not good don’t even have an insurance policy, it’s just what somebody told them or what they’ve heard and they amplify it without having a personal experience. The result of that exercise we did has given us a lot of light to the areas that needed to be attended to. And we’ve mandate a sub-committee of the insurers’ committee to work on it and come back with some report on how we can tackle it the more because the problem of perception is that once one company defaults, the whole market is condemned. And it is not so in real life. The sub-committee will come up with a communication plan that will really explain the industry as a profession better to the consumers out there. And importantly, all chief executives have agreed that we can name and shame so that people can keep away from doing bad and we’ll do that.