OMOTAYO ARAOYE and AMINA HUSSAINI, Abuja
Having exhausted the local capacity on the 2020/21 Nigerian National Petroleum Corporation (NNPC) consolidated insurance package (CIP), the handlers have gotten the tacit approval on the reinsurance treaties which documentation must be filed in seven days after the end of COVID-19 restriction of movements.
The approval from the Insurance sector regulator, (NAICOM) came via a circular referenced NAICOM/DPR/CIR/29/2020 and dated April 1.
The circular gave regulatory approval to every component of insurance business including the portion for the international market which has also shut down owing to the ravaging coronavirus pandemic.
The coronavirus pandemic is dealing the world a terrible blow leaving stocks tumbling and businesses generally disrupted with lifestyle affected in a disastrous manner that has left individual countries to hurriedly contrive measures to curb its spread.
The April 1 circular signed by Pius Agboola, Director, Policy, and Regulation to all insurance institutions in the country contained further directives to the previous circulars NAICOM/DPR/CIR/27/2020 and NAICOM/DPR/CIR/28/2020 issued March 24 and 27 respectively.
The regulator which noted the importance of insurance coverage particularly during the COVID-19 movement restrictions stated that it has granted forbearance to existing businesses and their foreign reinsurance proportions that are renewed during this COVID-19 period.
The NNPC insurance being an existing business that expired on March 31 and had NAICOM approval for the expired policy falls in this category. The handlers are expected to place a portion of the reinsurance part of the business which renewal begins Wednesday, April 1 in the international market which has since shut down owing to the rampaging COVID-19
“Where Approval-In-Principle for the preceding insurance period had been granted, all renewals or extensions of the foreign reinsurance proportions that become due during COVID-19 movement restriction are permitted for renewal on the existing basis”.
The regulator explained further that the approval for the new reinsurance treaties during the period of COVID-19 will be treated following the exhaustion of local capacity. The Nigerian Local Content Act prescribed that 70 percent of the business is localized in the Nigerian market and this is seen in the distribution of the business among local underwriters and brokers
“Where Approval-In-Principle for the foreign proportion of a new insurance placement is required during the COVID-19 movement restriction, it shall be treated on the basis of “Use and File” subject to prior exhaustion of in-country capacity. For the avoidance of doubt, after utilizing available local capacity, the lead insurer is permitted to reinsure the excess of the risk offshore and submit relevant documentation to the Commission thereafter.”
“All Post Placement Reports, Reinsurance Treaties and other related special risks foreign reinsurance documentation due for submission during the pendency of the COVID-19 restrictions are to be submitted when movement restrictions are lifted”.
“Please note that all insurance/reinsurance placements shall be done in accordance with other relevant extant insurance laws, regulations and guidelines while all submissions to the Commission including the hard-copies sequel to the above forbearance shall be done not later seven (7) days from the end of COVID-19 Movement Restrictions”.
The insurance regulator is not alone in granting forbearance at this critical period, the banking regulator, the Central Bank of Nigeria (CBN) announced forbearance in measures to cushion the effects of the COVID-19 period.
An instance was a measure announced a fortnight ago in which the CBN allowed further moratorium of one year effective March 1, 2020, on all principal repayments on all CBN intervention facilities while allowing participating financial institutions are hereby directed to provide new amortization schedules for all beneficiaries.