Shareholders, under the aegis of Progressive Shareholders Association of Nigeria (PSAN) have called on the National Insurance Commission (NAICOM) to put in place policies that would increase insurance penetration and enhance investors’ returns.
The shareholders, who also decried poor returns on investment from insurance companies blamed the development on over regulation, insisting NAICOM should implement changes that will guarantee them better returns.
In a statement signed by the President, PSAN, Mr. Boniface Okezie, the shareholders noted that the regulator should focus on implementing aggressive expansionary policies that would increase the sector’s penetration.
According to the statement titled: ‘Shareholders Concerns on Growth and Insurance Penetration and its Regulation by NAICOM,’ the shareholders pointed out that the amended Company Income Tax Act 2007 is punitive to insurance companies, saying that provision for unexpired risks (Section14(8)(9) ‘and provision for other reserves, claims and outgoings, section 14(8)(b) are restrictive.
The shareholders said: “While we agree that sanity is required, it shall not be at the expense of growth. The reality is growth comes at a risk. The key objective in regulation is to understand these risks and manage them. It also means developing policies to allow insurers to meet the needs of various customer groups. We believe in effective enforcement policies, policies to stop rate-cutting, policies to allow various payment frequencies.
For instance, monthly premium payment, stricter enforcement of the law on no-premium-no cover for brokers. NAICOM should stop the levying long term business and look for other ways to generate healthy income.”
They also urged the new leadership of NAICOM to change some ridiculous rules that are not friendly to the shareholders in the industry.
Citing examples of some of the rules, they said: “Despite the insignificance of profit before tax (PBT) of insurance companies in comparison to the banks, the minimum tax payable by both is comparable. In reality, it shows lack of understanding of insurance business. The company income tax (CIT) limits unearned premium reserve. Claims paid are management expenses, all of which are reasonably incurred in the insurance ordinary course of business. Therefore, insurance companies are penalised when paying claims. Ordinarily, these expenses should be considered as cost of sales and treated as allowable expenses,” they said.
The shareholders advised the commission to develop more tax benefits of life insurance products to customers so that it can grow as a method to preserve wealth.