The National Insurance Commission [NAICOM] has terminated its Bancassurance plan with the Central Bank of Nigeria [CBN] following CBN’s refusal to allow NAICOM to license banks in that regard. The Commission also mandated insurance firms to stop paying commissions, fees, referrals and introductions to banks in respect of insurance transactions.
Mr. Mohammed Kari, Commissioner for Insurance, NAICOM, gave the directives in Lagos during the investiture of the 22nd chairman of the Nigerian Insurers Association [NIA}, Mr. Eddie Efekoha.
“As you aware, the Commission has been in discussion with the Central Bank on the Bancassurance distribution channel for sometime now. However, in a letter received last week, the CBN asserted that NAICOM is not in a position to licence Banks and thus we cannot go ahead with the arrangement for now. However, NAICOM would continue to engage the CBN until all the grey areas are resolved. The second however, is that from today, all relationships the Commission had hitherto accommodated where insurance Companies pay Commission/fees to Banks for Insurance transactions, referral or introduction in any guise is no more valid.”
Kari warned that NAICOM will not hesitate to impose appropriate sanctions on insurance companies utilising or intending to utilise any institution including banks, airlines, online or web-based aggregators that have not been licensed by the Commission.
On capital, the NAICOM chief said:
“We have quite a number of companies that have either eroded capital base or have miss-matched their assets/liabilities cover, mostly arising from wrong investment decisions.Our concerned is for insurance companies to hold sufficient capital to cover their risk and liabilities when they arise at all times. This is very crucial in turbulence times like the ones we are currently going through. While we are going to develop a full risk-based capital framework to determine regulatory capital, we will be expecting companies to initiate the appropriate capital adequacy reviews and have their actuary report the capital needs of their business in a financial condition report. A guideline of which would be released in due course. “
He added that it is important for all insurers and reinsurers to get used to voluntarily holding capital that will protect policyholders against adverse outcomes that could negatively affect their ability to meet their obligations.
“We are not unmindful of certain challenges the industry is exposed to on daily basis, but we trust that with the current drive and the collaborative approach between the regulator and regulated, these challenges can be overcome to the benefit of the consumer in particular and the Nigeria economy in general. “
