NAICOM Expresses Serious Concern Over Industry’s Unethical Practice

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….Asks Insurance Bodies To Restore Sanity Or Face Sanction
Yemisi Izuora

The National Insurance Commission ( NAICOM) has challenged stakeholders in the insurance sector and in particular insurance bodies to enforce discipline and promote professional integrity to enable the industry grow in line with international best practice.

The regulator is particularly worried that professional associations have not taken seriously the issue of ethics into consideration which often allow sharp practices by operators further causing more image crises in the sector.

The commissioner for insurance, Mohammed Kari who spoke at the 2017 professional forum of the Chartered Insurance Institute of Nigeria( CIIN), charged leadership of the Institute to reinvent itself as a professional body and update its curriculum to either adopt or adapt contemporary best practices for the overall benefit of the profession.

Kari therefore implored the new President of the institute to treat the issue as priority in her agenda, while noting that when this, alongside other steps are taken, it will engender respect and credibility for the Institute and the insurance industry at large.

He urged the institute to ensure members upholds the ethics of the profession, adding “Posterity will not judge us right if we depart this career without leaving a positive and lasting impact on what had sustained us this far.

Continuing Kari said, ” By a simple exercise, we can ask ourselves how many of these CIIN certified and qualified members have exhibited and sustained the spirit of the profession. How many of us conduct our business in line with the ethics, standards and principles that guide the practice of an insurance professional. The conduct of some of our professionals in the market is; to say the least; appalling and I want to urge the Institute to take a critical look at this development with a view to coming up with measures to arrest it.

“We look forward to a day when a professional will be de-certified by the Institute for unprofessional conduct. Cases are abound around us in other professions where the privileges of a practitioner is withdrawn for some unacceptable act in his calling.

“So I call on the Institute to review its Code of Conduct for members in order to be in tune with the current international best practice. There is obvious need to enforce discipline in the system and there cannot be a better a place to start than from the members of the Institute.

” In the spirit of self-regulation, the Commission therefore demands that the Institute gives an accelerated attention and incept the process of reviewing and enforcing the Code of Conduct for members, failure of which we would be left with no option but to enforce it as contained in the law.”

He expressed concern over the recent report released by Nigeria Insurers Association (NIA) that Nigeria is being deprived of billions of Naira due to “dearth of professionals in marine insurance in the country which has paved the way for unethical practices in this class of insurance business.

“I am glad that this is coming from the NIA, the umbrella trade Association of the Underwriters. So, my question is: what is the NIA, either as a body or individual companies doing about this dearth of professionals not only in the marine sector but across all the classes of insurance? This fact was sadly confirmed by many of our well respected Chief Executives when we ruled that all Insurance companies must recruit at least one top professional as an Executive Director, their excuse for non-compliance was that we don’t have the right professionals to be EDs.

“Given that statement we concluded that some want to continue to be sole administrators of their companies or if that assertion was true then we have too many operational license out there. Either way there is justification for further consolidation in the industry.

He said there is an urgent need for a reawakening to ensure our professionals are continually trained, re-trained and equipped with prevailing skills and knowledge for optimal performance in line with international best practice.”

He assured that the Commission on its part would continue to support initiatives either from the institute or any of the trade Associations towards ensuring Insurance professionals are regularly updated to enable them align with current global trends. “We would work with the Institute and the College of Insurance to agree on the appropriate curriculum for such training and pass the necessary regulations to make it mandatory. Training for practitioners goes beyond attending some conference for MCPE points.

“I want to task the CIIN and indeed, every insurance professional to brace to the challenge to upscale our skills in all areas to safeguard the growth of the industry.

He urged them to join hands together to rid the industry on quacks and unprofessional activities for the overall benefit of all.

He added that the commission would continue to provide the enabling and sane environment for insurance business to thrive in the country. While noting that the various reforms and initiatives of the Commission all points towards ensuring the business environment is prepared and conducive for business.

“We are living in a world that constantly opens new realities. We have to be bold in identifying these new realities and then embrace them and reinvent our industry. Our industry is ailing while our profession is sliding into extinction. Symptoms of the ailments can be seen all around us. This includes aging workforce, low operating capital, scattered capacity and we spend our time crossing the Ts, dotting the is but missing the point.

“We are an industry created on the principles of partnership but has failed to imbibe the culture of partnership. We have lost our stale justification for failure to learn and progress. Our persistent self-inflicted failure has distracted investment from our industry. It has increased skepticism in our consumers and most tragically it has attracted “clever and ingenious people” into our assumed professional undertaking. In other climes these clever people would be called criminals but we have provided a convenient platform for them to excel and in turn continued to enable corners to be cut even where there is supposed to be non.

“The looming disaster as it is now, is, professionals are turning into “clever people” and the professionals don’t see the danger anymore. All past attempts to reinvent ourselves have been attacked by these clever people in our mist sadly through our professionals. Their stake in us is short term. They very much know if we plug the leaks and change, they loose, and If we fail they would only move on and we’d be the losers.

“As gloomy as it may sound, I believe we can make it better if we want. If we want we can resolve to turn around the fortunes of our industry and profession. As part of this resolve, the Commission is about to exposed the draft of the revised Code of Corporate Governance to all stakeholders. Not only have we always resisted change as an industry, we have actually fought against it, sometimes with silly arguments of being different or requiring more time to do what other sectors have achieved overnight.

He added that low insurance penetration has continued to be an issue in this market. To resolve this, we have identified the limited channels of distribution as one of the major draw back. The industry has concentrate on servicing only government and corporate clients to the detriment of the retail and micro consumers. Failure to effectively enforce the compulsory classes of insurance is another.

“In these regards we have considered and agreed to create additional distribution channels in the market to include using the services of state government to enforce compulsory insurance at the state level. We have further decided to explore and de-mystify the partnership type of operation for Brokers and I can assure you it will open a new vista in insurance inter-mediation in Nigeria and most importantly it would clearly separate the professionals from the businessmen.

He added that to underscore the commission’s determination to deepen insurance penetration, it has exposed the following draft guidelines: “Web Aggregators Operational guideline, State Government’s Implementation of Compulsory Insurance (or State Financial Advisers) guideline; Independent Agents Operational guidelines;Mutual Organisations, Associations, Community Based, Micro Insurance Agencies and Non-Governmental Organisation guidelines.

In her speech president of the Institute, Mrs Funmi Babington-Asheye said despite the exit from recession, many businesses and individuals are still going through financial and economic crises caused largely by happenings in the local and global business environments, over which they and insurance practitioners have no control.
She however urged insurance companies and practitioners to explore strategies that will ensure that their entities remain solvent and are able to weather the storm, irrespective of the dynamics of the business environment.

According to her, As an industry that indemnifies investors and risk takers, insurance underwriters must remain stable, strong, resilient and financially solvent enough to meet emerging obligations. How to achieve these goals in a sustainable way is part of the objectives of this year’s Forum.
“As businesses, we must improve our product offerings, enhance our customer service delivery efforts in order to sustain and increase their patronage. By delivering value to our clients, we would be able to make profit for our shareholders over the short to long term.
” Also, we need to minimize our cost of operations and engage in financial engineering as strategies for growing our businesses on a sustainable basis. For instance, the pool of funds which accumulate through premiums should be optimally invested in various instruments within the limits set by our regulatory framework.
“We must learn to match our capital projects/expenditure with our stream of earned profits to avoid funds mismatch, illiquidity and financial distress. This is the purpose and spirit of Section 24(1) of the Insurance Act 2003 which we are all familiar with. In summary, as we strive to create more wealth for our shareholders, solvency and financial stability should not be compromised by any underwriter in the long term interest of the Industry and Profession.

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