Weak Regulation, Poor Leadership Ruining Insurance Sector
Insurance industry experts have blamed weak industry supervision and poor leadership for the sector’s abysmal performance over the years.
They admitted that over the years, the insurance industry in Nigeria has experienced slow and stunted growth for reasons such as unfavorable government policies and low penetration, but insisted that poor regulation and weak leadership were majorly responsible for the sector’s current disgraceful state.
Specifically, they picked holes on the Mohammed Kari – led management style, emphatically stating that he lacked “the capacity to transform the sector and boost its revenue and contribution to the country’s gross domestic product (GDP).”
Currently, the insurance sub sector contributes a paltry 0.4% to the GDP, making it one of the poorest when compared to other countries in the continent.
President Muhammadu Buhari, in July 2015, appointed Alhaji Mohammed Kari as the Commissioner for Insurance and Chief Executive of the NAICOM.
Speaking at a retreat in Abuja, shortly after assumption of office, Kari had admitted that a strong insurance industry could create a successful economy. But after three years in the saddle, the sector is still bedeviled by weak growth in revenue, low penetration and other sundry problems, with the no end in sight.
Checks by THISDAY showed that capitalisation of insurance companies listed on the Nigeria Stock Exchange has been poor and in terms of market performance by sectors, most insurance entities have not done well.
Poor supervision of the industry was also blamed for underhand dealings by operators. Despite the threat of sanctions, most insurance companies fail to meet the set deadline for submission of their financial reports.
Only 32, out of 58 insurance and reinsurance firms operating in Nigeria, have so far submitted their financial reports to the commission in line with the directive of International Financial Reporting Standards (IFRS), on total disclosure of all business activities from insurance firms.
NAICOM said in a recent release that it approved the 2017 financial statements of 18 insurance companies, while accounts of 14 others were withheld for various reasons.
The regulator listed the companies whose accounts were approved as Continental Reinsurance plc, Custodian life Assurance, Custodian and Allied Insurance, FBN General Insurance Ltd, FBNLife Insurance, AXA Mansard plc, and Regency Alliance Insurance.
Others were Law Union & Rock Insurance Plc, Wapic Insurance Plc, NEM Insurance, LASACO Assurance Plc, Prestige Assurance, Consolidated Hallmark Plc, Ensure Insurance plc, AIICO Insurance, Guinea Insurance, Wapic Life Insurance Plc and Leadway Assurance.
Two companies’ accounts are still on review, while three others were queried. The agency further explained that four other companies are under analyst review and while two companies-Old Mutual Life and Old Mutual General Insurance are under supervision review.
It was gathered that KBL Insurance is among firm under review, while Zenith Life and general are queried. The 36 firms that failed to meet the June 30, 2017 deadline for submission of their reports, would be sanctioned by the regulator and are liable to pay a daily fine of N5000 pending the submission of their reports.