The National Insurance Commission (NAICOM) has renewed war against insurance firms, insurance brokers offering gratification to secure business in the industry.
The campaign against rate cutting, premium purchase and rebate to secure business, sources said, has been on the increase in the market in recent times because of stiff competition as insurers, brokers reduce rates to retain business.
According to industry managers, it is an open secret that operators in the insurance market are engaged in cut throat competition in the industry, and to out do each other they resort to offering commission, rebate, rate cutting to secure business especially in the present economic environment.
The Commissioner for Insurance, Mohammed Kari, said recently that the commission has taken up the issue seriously and was ready to discipline any operator caught in the market because there are regulations for the practice of business of insurance in the industry.
Specifically, the commission had in a circular to insurance companies in 2014 stated “It shall be illegal for any insurance institution to solicit, offer or allow commission or rebate in the transaction of insurance business except as provided by extant insurance regulation ad guidelines.”
Besides, the commission warned that any insurer who grants or receives a rebate offer, demand pay or receive commission shall be made to pay penalty as prescribed by the insurance law.
Also, NAICOM further directed that every insurer is required to submit quarterly return on the rebates, brokerage commission and other fees paid out or payable on all its production during the preceding quarter to the commission, not later than 14 days from the end of the quarter.
Every broker the circular said, was required to submit to the commission a copy of his dedicated client account, duly stamped and signed by the bank and a quarterly return of the brokerage commission receivable or deducted at source, taxes paid and rebates received during the preceding quarter.
Besides, it further directed that no insurance broker or its agents shall charge or receive premium in excess of the actual premium on an insurance policy that may result in refunding the excess amount paid thereafter.
NAICOM maintained that any insurance institution that failed to comply with the content of the circular shall be penalized in line with relevant provision of the Insurance Act 2003, NAICOM Act 1997, regulations, guidelines and such other penalties as may be prescribed by the commission from time to time.
Recently the Nigerian Insurers Association (NIA) submitted to the Commission market agreement by member companies for approval, as it has expressed concern over the breach in the market agreement endorsed by member companies aimed at checking against price war in the industry.
The association said ‘The issue of rating has continued to engage the attention of members of the governing council in the course of the year, a rating committee headed by Mr Wale Onaolapo was set up to review the rates on motor insurance business.
The report of the committee required cooperation with brokers for the purpose of effective implementation. This led to the establishment of the joint technical committee of NIA and NCRIB headed by Mr. Eddie Efekoha, the committee has been working and we are optimistic that their report will go a long way in addressing market concerns”.
Source: Guardian News