Yemisi Izuora
Nigeria’s insurance industry regulator, the National Insurance Commission, NAICOM, is set to deal with unethical industry practice making particular reference to abuse of Offshore Risk Placement.
It said that it has become imperative to ensure that Nigerian insurers, reinsurers and pools be offered and allowed to decide the proportion of risk they wish to accept, subject to their respective capacities, before applying for approval for offshore placement of the excess.
The regulator therefore warned that failure to adhere to the directive would attract appropriate regulatory sanctions as well as declinature/rejection of such requests.
The directive Oriental News learnt was because of failure or neglect of insurance practitioners to consider and fully utilise relevant in-country capacities of insurance/reinsurance institutions such as pools, reinsurers and other approved local/recognised insurance capacities, prior to applying for approval to cede certain proportion of some risks offshore.
Director (Authorisation & Policy) of NAICOM, Mr. Pius Agboola, who gave the directive also mandated that all recognised reinsurance treaties/arrangements and additional capacities offered by local reinsurers/pools must be fully utilised before consideration for offshore placement of the excess.
Agboola charged: “Please ensure strict compliance as we would not tolerate any breach of these directives. Failure to do so will henceforth result in the imposition of appropriate regulatory actions as well as declinature/rejection of such requests.”
According to the NAICOM, the directive became imperative due to some situations where the pools, insurers or reinsurers are offered participation, the institutions are either offered minimal proportion below their capacity or informally restricted and/or compelled to accept lower than their respective capacities for the purpose of justifying cession of the risks offshore.
“This unethical practice which undermines our collective resolve to ensure full utilisation of available in-country capacity in line with domestication and the local content policy contravenes extant insurance laws and regulations and shall, therefore, not be tolerated henceforth.
“Additionally, the Commission has observed that some insurance institutions have inappropriately arrogated to themselves the authority to unilaterally exclude some insurers over alleged outstanding claims. It has, therefore, become imperative to remind all insurance institutions that they are required to report any alleged non-settlement of claims to the statutory grievance/complaint redress mechanisms (the Commission’s Complaint Bureau) for appropriate action prior to determination of their participation,” NAICOM stated.
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