The regulator acts as a security dog. When a dog is stationed in a house to secure the house, the dog ensures it screens every visitor to the house before it allows the visitor to enter the house. If the dog perceives that a visitor to its owner’s house has an ulterior motive against the occupants of the house, such dog will do everything within its capacity to prevent such an enemy from getting into the house.
From the above illustration, the occupants of the house are the insuring public(The insured) whose interest the regulator(“The watchdog”) is out to protect, while the visitors are the insurers and the intermediaries whom the regulator issues license to before they could carry out their operations to render services to the insured.
The National Insurance Commission (NAICOM) was established in 1997 by The National Insurance Commission Act 1997 with responsibility for ensuring effective administration, supervision, regulation and control of insurance business in Nigeria and protection of insurance policyholders, beneficiaries and third parties.
5 FUNCTIONS OF THE REGULATOR.
NAICOM as the regulator is saddled with the responsibility to register and grants licences to insurance companies, insurance intermediaries and loss adjusters. The inspectorate department of the commission carries out routine and special investigations of operators to ensure that they operate according to the provisions of insurance Act 2003, the relevant regulation and policy guidelines. Every limited liability company whose primary operation is into insurance advisory, intermediation and execution of insurance products must obtain their operational license from NAICOM.
NAICOM plays oversight functions to ensure strict compliance of regulatory standards by all parties in the insurance market.
The business of insurance is governed by fundamental principles as discussed. 6 FUNDAMENTAL PRINCIPLES OF INSURANCE YOU NEED TO KNOW NAICOM plays a supervisory role over these companies on the adoption of these principles in their operations.
NAICOM puts checks and balances in place as a form of control measure for every operator within the industry in terms of profitability and liquidity. For instance, the following are the new minimum capital base for operators within the industry.
|S/N||CLASS OF BUSINESS||EXISTING MINIMUM PAID-UP SHARE CAPITAL (FROM FEBRUARY 2007)||REVIEWED MINIMUM PAID-UP SHARE CAPITAL (FROM MAY 2019)|
|1||Life Insurance Business||2 Billion Naira||8 Billion Naira|
|2||General Insurance Business||3 Billion Naira||10 Billion Naira|
|3||Composite Business||5 Billion Naira||18 Billion Naira|
|4||Reinsurance Business||10 Billion Naira||20 Billion Naira|
This measure is necessary to ensure an adequate capital base for each category of the operator. The insurance business is a business of premium collection with a promise to settle claims when the unfortunate happens. It is the fiduciary duty of NAICOM to ensure every licensed operator performs their regulatory obligations.
NAICOM has a prerogative right to wind up any insurance company due to insolvency.
NAICOM has the autonomy to sanction erring members for non- compliance and deviation from regulatory standards and fundamental principles.
These sanctions could either be:
- Withdrawal of license
Fines are paid when:
- Dues are not paid as at when due
- Regulatory reports are not submitted as at when due.
NAICOM may suspend the CEOs or senior management team of the operating companies for misconducts, non-professionalism, and non-compliance.
WITHDRAWAL OF LICENSE
NAICOM has prerogative rights to withdraw operators’ license for the following reasons:
- Breach of the provisions of the law
The afore mention functions of NAICOM are to solely protect the interest of the insuring public in the industry. Before the enactment of the National Insurance Commission Act 1997, the insurance’s image had been bastardized due to various unethical practices and non- professionalism in the delivery mode of services in the industry. This was the cause of several causalities that were experienced by the public and the effect of these was the erroneous concept of insurance that was subconsciously formed on the mind of the public to date.
The good news is, the days of casting vote of no confidence on insurance contracts are over.
The strategic objective of NAICOM is to ensure the interest of consumers are adequately protected.
To those who have been following the trend of events in the insurance industry such as:
- The recapitalization exercise of 2007 and 2019
- NAICOM Code of Corporate Governance of 2009
- NAICOM guidelines for insurance Brokers
- NAICOM Market conduct and Business Practice
- Annual audited financial reports
You will recall that insurance industry have made remarkable progress from what it used to be.
Ensuring customer satisfaction is the overall strategic objective of the senior management in the insurance industry. This objective is now been incorporated to become a major part of the business objective which has been integrated to form business policy for most of the insurance company
If you have followed my articles on how to benefit from the 4 Parties in the insurance market, HOW TO BENEFIT FROM THE 4 PARTIES IN THE INSURANCE MARKET. PART ONE. you would agree with me that, the insurer, the intermediary and the regulator are all working towards a common goal which is for the insured to benefit immensely from the insurance market.
Engage the services of Bimbol Consultancy Services when next you need an insurance policy.
Your insurable interest is our indemnity interest. That is why we will ensure your adequate protection.
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