The National Insurance Commission (NAICOM) has warned that it will withdraw the licences of the newly registered insurance companies if they failed to abide by the industry’s ethics and sound corporate governance.
The Commissioner for Insurance Sunday Thomas on Fruday told the licensees that they are holding the licenses on lease at a meeting with the board members and management of the new reinsurance and insurance companies.
Four underwriters and one reinsurance company were announced as new entrants into the industry on Thursday having been granted operational licences by the sector regulator.
The new operators who were handed the operational licences at NAICOM Head Office in Abuja are: Heir Insurance Limited (General); Stanbic IBTC Insurance Limited; Heirs Life Assurance Limited; Enterprise Life Assurance Company Nigeria Limited and FBS Reinsurance Limited.
“We will hold the management responsible if the company is not aligning with effective corporate governance and compliance with regulatory instruments. We are issuing you a license today but it does not belong to you. It is on lease but you will determine how long the lease period will be. I pray that you will not give the commission reason to recall the license” he said.
“How long they keep the license depends on how well they adhere to the dictates of good corporate governance and insurance rules”.
According to Thomas, “as an operator, there are roles and responsibilities. One thing I want to make known is that companies don’t die, people kill companies and when companies die, the first port of call is the board of directors”.
He stated that their “responsibility as a company is to ensure that fit and proper persons manage the company, know your limits when it comes to taking on risks. I want to encourage your boards that internal models must be adopted by your system in such a way that at every point, you match your risk capital with the level of capital required to drive the company. Corporate governance is very key, the role of the management and board of directors must be defined” he told the licensees.
He urged board members of all the newly licensed insurance and reinsurance companies to “avoid crossing borders that can disrupt the system. Over the years, we have noticed that most of the crisis in companies starts from lack of proper understanding between the board and the management”.
To the members of FSB reinsurance, Mr. Sunday Thomas said “the last license that was issued for a reinsurance company was 35 years ago but I think the time has come. We as a commission, are committed to deepening this market and we have noticed that most of the big ticket risks are still being shipped abroad, we will make sure that we retain as much as we can for the development of the economy”.
It was 10 years ago that the last insurance license was issued but the CFI started that “ It was deliberate especially with respect to life underwriters and non-life underwriters because we had wanted people to acquire the existing companies”.
He added that “now, we have gotten to a point where there is need for us to deepen the market therefore the need for us to expand the scope of our operations, the only thing we can do is to increase the supply side”.
The demand side he said “is yearning for products that they can buy-in and secure their future. We believe that the team will do what will ensure the sustainability of the companies”.
The demand side of the market he noted “is asking for products that are consistent with their needs. We have not just licensed you to do what has been done in the market, we expect you to come with up products that will solve the problems of the people, we expect you to be creative, we expect you to take very seriously regulatory and supervisory instructions”.
Responding on behalf of FBS Re-Insurance, its CEO and former Commissioner for Insurance Fola Daniel said they do not “have a reason not to be compliant, we will be self-regulative in a way that the commission will not suffer headache on account of the company”. He promised that they will add value to the insurance industry particularly the reinsurance arm”.
On his part Tony Elumelu, Chairman, Heirs General said they will abide by the standards set and expected by the Insurance Commission stressing that “we will try to uphold the high standards set by the regulator”.
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