Insurance Industry Groans Under Kari
For many insurance companies, underwriters and brokers alike, these are very trying times, writes Deji Sofola.
These are very trying times for many insurance companies – underwriters and brokers. Palpable fear of victimisation and sanctions currently pervade the insurance industry. Many practitioner spoken to want to remain anonymous, nobody wants to stick out his neck, for fear of being victimized, but they insist that the regulatory body, the National Insurance Commission (NAICOM), has become a monster under Mohammed Kari, the current Commissioner for Insurance.
These days NAICOM penalizes underwriters at will for “minor breaches and sometimes laughable reasons,” one practitioner complained, citing the case of some underwriters who were fined N500,000 for every NAICOM telephone call they failed to answer. The implication is that if NAICOM claims that they made 20 unanswered calls, the underwriter will pay N10,000,000. Insurance brokerage companies which are already feeling the effect of shrinking businesses are not spared. They get fined arbitrarily for minor or contrived breaches thus eroding their already meager resources.
In December, NAICOM in one fell swoop delisted 108 of the 420 licensed brokers, thus throwing over 1000 employers and employees into the labour market. The Minister of Finance, Mrs. KemiAdeosun, subsequently ordered NAICOM to reverse the delisting, but NAICOM’s subsequent action was like giving with the right hand and taking it with the left hand. NAICOM rolled out stringent conditions for the delisted broking companies to meet before being re-licensed. Among other conditions are the removal of the management of the firms affected while each of the companies has to pay N2.75 million to recover its licence.
Industry watchers are wondering where NAICOM wants these companies to get competent and qualified professionals to fill the vacuums in an industry already short of qualified professional. Though some of the delisted brokers were in major breach of NAICOM provisions, some of them had very minor issues and the delisting amounted to killing a housefly with a sledgehammer in the first place.
The irony is that while NAICOM is delisting existing brokers, it is not licensing new brokers. Some new broking companies approved during Mr. Fola Daniel’s time have not been issued licences, even though NAICOM collected N2,250,000 licensing fee from them since August and September last year. We located four of these new brokerage companies with their addresses as published in THISDAY edition of June 19, 2015, but as usual met a brick wall: none was willing to talk. But a source did say that Kari is not satisfied with the process through which the successful brokerage firms emerged during his predecessor’s era and is carrying out his due diligence. This is after NAICOM wrote these companies to pay licensing fee and incept a professional indemnity policy to cover their legal liabilities for professional negligence. These policies have been running for four months or more, yet no licence for these companies to practise.
The source asked rhetorically, “if and when almighty Kari decides to release these licences, what will be the effective date of commencement of business . Many brokers operate with the receipt of payment as evidence of renewal. NAICOM is so inept and poorly run, it is unbelievable and ironic they are punishing insurance companies for breaches. NAICOM is a typical civil service setup where files disappear and officially acknowledged letters go missing.”
The source also said that among the requirements of NAICOM for obtaining licence, the chief executive designate must resign his/her previous employment. The implication is that some of these chief executives left their jobs at least a year ago. “Where do you expect these new companies with small capital base to get money to pay their CEOs for this period when NAICOM will not allow them to operate?” He lamented. “These people are wicked; they just sit in their air-conditioned offices in Abuja enjoying free money. They do not know what life is like in the streets,” he concluded.
Many practitioners fault Kari’s strategy for moving the insurance industry forward. “While the industry certainly needs sanitization, you do not throw away the baby with bath water. Look at how the government has supported the banking industry. When toxic debts threatened to bring down the banking industry, government bailed them out via AMCON (Asset Management Corporation of Nigeria), which acquired the toxic debts. What we need in the industry is stimulation and building of capacity.
“If compulsory insurances are well implemented, for instance, premium income can grow by as much as N80b per annum. Do you know what that can do for the insurance industry in terms of capacity and employment generation? Then you have micro-insurance. We need to perfect the systems so that we can take insurance to the nooks and crannies of Nigeria the way the telecoms industry has done. This again can add another N50b in premium income to the industry. These are the areas we want NAICOM to be serious with, not killing flies with sledgehammers. If the industry allows Kari to run riot the way he is going, we shall all wake up one day and there will be no insurance industry,” he warned.
During the insurance sum- mit in December 2014, the former Minister of Finance, Dr. NgoziOkonjo-Iweala came up with a blueprint to grow the insurance industry exponentially. The plan was that the insurance industry will grow its premium from N300b to N1 trillion over a period of three years and employ 100,000 personnel by December 2017 up from the 30,000 employees as at December 2014. Currently the industry is far from meeting this target and some practitioners feel this should be Kari’s primary worry instead of the unnecessary witch hunting.
Some practitioners also accuse Kari of bias. “While he is persecuting brokers on the Lagos axis, he is renewing licences of his cronies, especially on the Abuja axis, thus giving them undue advantage. Many of these companies are unable to bid for businesses because of lapsed licences, giving his cronies advantage,” another practitioner lamented. Not even board members of the National Council of Registered Insurance Brokers (NCRIB) are spared. Some of them have not been able to renew their licenses.
NAICOM staff are also having a taste of Kari’s highhanded. Staff and officers as high as directors have become lame ducks and zombies. Performing legitimate tasks within their job purview can earn them queries. So many issues needing attention are at a standstill with files piling up in Kari’s office. NAICOM penalizes underwriters and brokers for alleged unanswered calls, meanwhile, many of the official NAICOM phone lines do not go through when you call. When your calls manage to go through, they go unanswered. When they manage to take your calls, the officials are unhelpful because Kari has “castrated us.”
Many of the old insurance practitioners and industry watchers are not surprised at the turn of events. “We received the appointment of Mohammed Kari as the new Commissioner for Insurance, following the expiration of the tenure of Mr. Fola Daniels, with trepidation. We had reasons to be worried. As Deputy Commissioner for Insurance, only the intervention of Fola Daniels saved many companies from being sanctioned by the National Insurance Commission. Kari works with the law raw, rather than the spirit of the law,” one old practitioner lamented.
But it is not only the application of the “law raw” that practitioners are worried about, Kari has taken impunity and vindictiveness to a new level. “Many industry players are being pushed to the wall. Before Daniel came in, NAICOM had myriad of ongoing court cases with insurance practitioners. He succeeded in resolving all the cases out of court, which gave NAICOM the time and focus to concentrate on its core functions. The way Kari is going, we are going to go back to the pre-Daniel era very soon,” one old player said emphatically.
Sofola is an Ibadan-based Insurance practitioner