Wanted For NAICOM: Visionary Leader To Redeem Industry’s Losses
Akintola Boulevard is a very quiet area in the Garki district of Abuja, the capital city of Nigeria. Stretching from the famous Rita-Lori junction to its end at the Old CBN building, the sprawling environment is likened to the highbrow Maitama and Asokoro with its architectural splendor. Apart from the noisy Garki village which life is a replica of the 24-hours life at Ojuelegba in Lagos, the long stretch road runs through a very serene environment.
Since 2015 however, its peace has been continually disturbed. Not only by the urchins at the nocturnal Garki village, but also by people that are considered to be civilized and cultured.
Midway in the area is the imposing complex of the insurance sector regulator, the National Insurance Commission (NAICOM) which relocated to Garki district in 2011. Other occupants of the area however said the commission’s presence since August 2015, has forced peace and calm to take flight from the area.
“They always lock up their office, occupy the road and disturb vehicular movements while carrying placards with different inscriptions such as “Kari Must Go”, “Buhari Please Intervene In NAICOM”, said an occupant in the area who noted that, NAICOM workers in the last four years, exemplified crisis that is always waiting to happen, rather than redemption of crisis and distress that insurance business is known for all over the world.
Between 2015 and July this year, the frequency of internal wrangling between the management of NAICOM and the staff depicts a troubled house, and by extension, the insurance industry that it regulates. The period was simply tumultuous.
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The crisis at the commission had ripples in the industry whose operators were continually at war. The insurance brokers were at loggerheads with the regulator and also, the underwriters were fighting NAICOM, their supervisors. The era marked a period of unending complaints and agitation against NAICOM’s alleged poor and high-handed management style in addition to its policies which operators also said lack human face.
An insurance underwriter summed up the era as a dark and wasted years during which the industry was stagnant and allegedly, with no direction in the Nigerian economy.
One major fact that observers regret about the period is lack of statistics on the industry, which the operators blamed on the management of the commission which was largely said to be incompetent at moving the sector forward.
They alleged everything at this period was at a standstill.
Motor insurance is a popular product of the industry and one of its regular revenue earners. Up till now, the commission does not have a valid record of insured vehicles on the nation’s 195,000 kilometers of roads. If it has the records, it cannot be accessed, even on its website.
Nigeria, according to the 2005 CIA World Fact Book has 13,000 square kilometer of water area which the insurance regulator has no statistics of the number of vessels and boats that run on it. Also, the compulsory insurance that would have been another huge revenue earner for the industry is still left untapped despite World Bank’s hint of a huge wealth in building insurance.
It was a rude shock when the current Acting Commissioner of Insurance Sunday Thomas, whom in 2014 was the Director-General at the Nigerian Insurers Association (NIA), the umbrella association for the country’s insurance underwriters, announced that about 75 percent of insurance papers at the nation’s seaports were fake, confirming that a large chunk of the industry’s revenue from the maritime sector is going to wrong pocket.
The alarming announcement again in 2017 by the same NIA that only eight million vehicles out of the 17 million on the nation’s roads as at then had genuine insurance.
Yet, efforts at tackling these challenges have not been seen in the right direction.
Inability of the industry in the last four years, to take advantage of the several opportunities in the Nigeria economy and convert them into revenues were some of the alleged incompetence that the operators said define the era of Mohammed Kari, the immediate past Commissioner of Insurance.
Up till now, NAICOM, the sector regulator, allegedly cannot boast of valid statistics on the Nigerian economy from which the industry that it regulates and collects levies from, derives its livelihood, according to a worker at the commission.
Workers of NAICOM also told InsideBusiness that these amongst others, largely form their reason for frequently disturbing the serene atmosphere of Akintola Boulevard between August 2015 and July 2019. They said frequent protests seem the only option to show their dissatisfaction with the situation at the commission for that period which both the industry operators and NAICOM workers described, as a dark period in the annals of the industry.
Kari, a seasoned professional whose work experience spanned about four decades was appointed July 31, 2015, to take over the reins after Fola Daniel, his predecessor, left office on July 30, 2015.
The immediate past insurance commissioner, whose first tenure at NAICOM ended July 30 2019 and still hopeful of another term of four years, is indeed lucky, having enjoyed government’s patronage for decades.
Moving from Yankari Insurance, previously owned by Bauchi state (Now FIN Insurance) to Niger Insurance (Federal Government owned then), to the old Nigeria Reinsurance Corporation and also to the famous old Nicon Insurance Corporation, Kari, who also had a brief stint at the then Unity Kapital Insurance (Now Veritas Kapital Assurance) before capping a long public sector service with the plum position in the nation’s insurance industry, the Commissioner of Insurance, is among the privileged few that had a swell time in the industry.
Saddening however, the industry is left bleeding.
Just as the 2015 to 2019 was controversial for the insurance industry, Kari also, has always sparked controversies.
At a time the world over was moving away from monopoly to liberal economy, the efforts of the management of Old Nicon Insurance to protect the provision of the Nicon Insurance Act that gave wholly to the corporation, the insurance of government assets, pitted Kari, the managing director at that time, against the industry.
Proponents of a level playing field argued that the provision was only inserted into Nicon Insurance Act to prevent capital flight and also, to grow the corporation which was then, a toddler that was operating among big foreign players. By late 1990s when the agitation grew louder, the tide had also changed for Nicon Insurance which by then, had matured into a huge financial octopus with several subsidiaries in Nigerian economy.
The argument that other competitors who also pay taxes to government and had improved the retention capacity of the sector held sway, while some government also agreed that they should also have access to the huge government insurance market. What finally nailed the policy was the support from United Nation’s Committee on Trade Development (UNCTAD) which vehemently opposed any policy or measure that gave undue market dominance to any government firm. That marked the beginning of the disintegration of Nicon’s domination of the sector, and also, prompted the decline of the enormous influence of its management staff including Kari.
The campaign against the monopoly only whittled the influence that Kari had built by being the managing director of the mighty Nicon with huge financial base. What was damaging to his profile was the stench from the indictment of some top officials of Nicon Corporation in the Nigeria Airways scam. Especially with the continual reference to the $13.935 million unsubstantiated payment to Alexander Howden as a contributor to the demise of the national airline, all the positive contributions of the Kari-led management of Nicon Insurance were rubbished and the individuals involved were moved to the negative side of history.
The report by the George Obiozor panel and the white paper on the scam, which was later reviewed by other panels headed by Retired General Theophilus Danjuma and former Governor, Kano state, Rabiu Kwankwanso contributed to Kari’s uneventful exit from Nicon Insurance in 2000.
This tainted Kari’s glorious era and marked his first exit from the industry that has brought him enormous fame and recognition.
Like the proverbial Cat with nine lives however, and being a thorough-bred professional, Kari re-emerged some years later to lead Unity-Kapital Insurance (now Veritas Kapital Assurance) which desperately needed relevance then. And once again, Kari rode the industry.
Although the recommendations of the White paper on the Nigeria Airways scam seem outdated, the stigma from the indictment of his tenure at the then Nicon Corporation still sticks and has refused to be trashed as seen in the 3 December 2018 letter from the recently dissolved Special Presidential Investigation Panel which shows that government still seems on the trail of the $13.935 million from the Nigerian Airways scam.
The letter signed by the former chairman of the panel, Okoi Obono-Obla stated that “The federal government of Nigeria accepted the recommendation of the commission that Alhaji Mohammed Kari and others be held responsible jointly for the sum of $13,935,966.30 which Nicon Plc paid into the account of Alexander Services Limited at Barclays Bank Plc Jersey Channel Islands. Any of them still in the service of Nicon or NAL should be relieved of his position’.
The request by the SPIP that Kari should appear unfailingly before it on 15 December 2018 in the light of the above, appeared to have woken up the sleeping dog, especially at the twilight of his first tenure and when efforts at securing a second tenure were in the work.
However, what has brought NAICOM to the front-burner in the last four years was its unending industrial crisis, and the threats of litigation by the two main arms of the industry which complained bitterly against the policies and management style of the Kari-led management of the commission.
These two issues could stand in Kari’s way to return as Commissioner for Insurance especially now that the government seems to be on the same page with the workers in the country as seen with the approval of the new national minimum wage. Also, a government that focuses on arresting the dwindling nation’s economy may be hard to please by the happenstances in the insurance industry in the last four years.
Unlike the insurance brokers who always threaten NAICOM in the daytime and go in the night to beg, the owners of underwriting firms lived up to their threat in 2018, and dragged the regulator to court to stop the implementation of the Tier-Based recapitalization model that was introduced in July 2018.
The dare-devil action of the underwriters’ shareholders association led by the outspoken Sunny Nwosu which forced NAICOM to a retreat on the Tier-based policy, according to some top officials of the commission, led the regulator to grudgingly suspend the State Insurance Providers (SIP) policy which the insurance brokers saw as a death-knell.
These two major policies that brought tension between the industry and the commission in addition to the internal crisis at NAICOM, marked out the immediate past era as a departure from the industrial harmony, wide consultation and peaceful co-existence that endeared to the industry, Fola Daniel, his predecessor who was there between 2007 and July 2015.
Kari’s tenure also recorded some positives.
The courage to stop the illegality perpetrated by both the NNPC and the handlers of its Consolidated Insurance Programme (CIP) marked Kari out. The National Oil Company had in the Year 2000s, on the advice of some insurance underwriters, and without federal government’s approval set up The Wheel, an offshore company in the Guernsey Island, a British colony described as a tax haven. The vehicle was referenced as one through which millions of dollar were fleeced out of the corporation under the pretext of insurance.
Other positives of Kari’s era include stricter enforcement of the AML/CFT Laws which raised up regulation compliance level, enforcement from 2016 of the industry’s codes of corporate governance which was released in 2009, Zero tolerance for unethical practices which improved the claim profile of the industry to N160 billion paid in 2018, and the strengthening of the regional cooperation and collaboration with peer regulators and international standard setting bodies.
These achievements by Kari however paled into insignificance when pitted against the decay in the commission and the industry in his four years at the commission.
In modern day world, website and internet are very important business tools for every progressive institutions. The website conveys information about an organization and its activities to the outside world through the internet. This enables the organisation to draw patrons, and give benefits to the two parties-the organization and the patrons who gets values from the immense contribution of these tools that give insights. The two-website and internet are indeed, the gateway to information about an institution that serious management does not joke about.
In Nigeria however, NAICOM, like many others that still live and conduct their businesses in the primitive era do not share this view. The commission during the era of Kari doesn’t seem to believe in a functioning website for the insurance sector regulator, while its Lagos Control office also has no internet for a very long time.
“We were in the dark and were cut off from the outside world for some years. Throughout 2017, we had no internet in the office and our website was down’, said a top official of the commission who craved anonymity.
Findings on the portal of NAICOM as at Wednesday August 28 at exactly 2.54 pm local time show that the last News and Event uploaded on it was on February 18, 2015. They were: a) Notice to the General Public on Unsettled Insurance Claims. B) 2014 Quarterly returns Non-Submission and, c) Status of 2013 financial statements of insurance companies.
On the click of ‘About NAICOM’ on the home page, another page opens with a bold inscription ‘The Account has been suspended. Contact your Hosting provider for more information”.
It took a strong warning from Chris Ngige, the Labour Minister who gave a deadline to the commission to fix the website and get it running as seen in the agreement signed on the 26 September 2017 between the labour union and the Kari-led management. It was witnessed by Bolaji Adebiyi, the permanent secretary, ministry of labour and employment.
“Even at that, we cannot boast of a website that runs for a week until the current new management that is making efforts to raise NAICOM from the dead”, said a worker at the commission’s Lagos office.
A check also at the Nigerian Bureau of Statistics (NBS), the platform that is the destination for economic statistics on Nigeria also reveal no statistics on the Nigerian insurance market.
Prior to Kari’s assumption of office as the Insurance commissioner in 2015, the commission always publish a statistical report that give insights into developments in the industry to provide data for research works and also, prospective investors who wanted insight into the market in Africa’s largest economy. Findings by InsideBusiness shows that the last of such publication that was modeled after The Bullion by the CBN, was the one for 2013 operations which came out in 2014.
“The publication for 2014 ought to come out by the end of 2015 but was abandoned after Fola Daniel left the commission’ according to another NAICOM official who noted that it is now difficult to get a formal statistical data from the commission on the state of the industry.
The sector had long battled poor public perception which has negatively affected its penetration and its resources. Efforts to redress this led into the sponsorship of a programme on the international unit of the national television, the Nigeria Television Authority 2 (NTA) to give viewers across the world, the opportunity to know of developments in the industry.
On the NTA programme, policyholders are told of their rights and obligations under a policy. For instance, if there is a delay in claim payment by any operator, there are phone numbers to call to report erring companies. This undoubtedly put the operators on their toes because of the untoward effects such reports could have on their operations.
Outcome of a check on NTA programme schedules showed that the programme is no longer on the airwaves and there has been no replacement to educate insurance policyholders.
“That programme had since been stopped and once you stop to educate Nigerians about insurance, you are indirectly weakening its awareness. People will not buy what they are not aware of, and people will not yearn for what they don’t know”, lamented the NAICOM official.
Micro insurance is another developmental programme that NAICOM started work on to improve the market prior to Kari’s take over. Sources at the commission confided in InsideBusiness that the programme that was ready before the exit of Daniel had slowed down and prospective investors were taking flight.
“Up till today, only two had been registered while many that wanted to go into the segment had been frustrated”, it was learnt.
The industry was prepared to burst into micro insurance by 2015 having seen the dramatic growth of this model in the Ghana market in the last seven years. In Kenya also, it is micro insurance that spurns the growth of the market which operated in a country that do not have vehicles like Nigeria but have one thing or the other to insure.
“The platform for micro insurance was ready but they refused to implement it. Otherwise let the commission publish activities in that segment. Many had made enquiries and applied but are today frustrated”.
The NAICOM official who also wondered about the state of Takaful insurance that was ready before the exit of Fola Daniel, noted that the programme was also frustrated as only two were registered in four years.
‘We should ask the commission about the state of Takaful insurance’, he stated.
Huge energy was devoted into the development and enlightenment of takaful prior to Kari’s tenure but the existence of only two companies in that segment until August this year when another two were approved spoke volume about the competence of the drivers at the commission and the readiness of the management as currently composed to take radical and visionary initiatives to move the industry forward.
TO BE CONTINUED.
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