Yemisi Izuora
The Nigeria Insurers Association (NIA) has advised those criticising the National Insurance Commission (NAICOM) of over regulation to educate themselves on process of regulation of regulatory agencies and speak from the point of knowledge.
Sunday Thomas, Director General of NIA told Oriental News Nigeria that some critics have formed the habit of looking at regulation from a particular point of view.
Reacting to a statement credited to the Shareholders of insurance companies under the aegis of Progressive Shareholders Association of Nigeria (PSAN), Oluwadare said “It is a matter of perception, those who see NAICOM as over regulating the industry is looking at it from one side.
I advise that they do a 360 degree review of the regulation before they can come to a logical conclusion” he insisted.
The PSAN had in a statement cautioned NAICOM on over-regulation of the insurance industry in order to reposition the industry for growth and ensure better returns for investors.
The President, PSAN, Mr. Boniface Okezie, who spoke on behalf of shareholders, through the statement, expressed concern about the low level of insurance penetration in the country and its not-too impressive contribution to the Gross Domestic Product (GDP).
He noted that this accounted for the below par value at which most of the listed insurance stocks are being sold on the Nigerian Stock Exchange (NSE, cautioning NAICOM against excessive regulation of the risk underwriting entities.
Rather, he called on the commission to implement aggressive expansionary policies that would increase insurance penetration in the country.
Okezie also noted that the amended Company Income Tax Act 2007 is punitive to insurance companies, as the provision for unexpired risks (Section14 (8)(9) and provision for other reserves, claims and outgoings, section 14(8)(b) are restricted.
“While we agree that sanity is required, it shall not be at the expense of growth. The reality is growth comes at a risk. The key objective in regulation is to understand these risks and manage them. It also means developing policies to allow insurers to meet the needs of various customer groups.”, Okezie said.
Stating that the shareholders believe in effective enforcement policies, policies to stop ratecutting and policies to allow various payment frequencies, adding that monthly premium payment, stricter enforcement of the law on no premium no cover for brokers needed to be addressed.
Okezie said: “NAICOM should stop the levying long term business and look for other ways to generate healthy income.
The shareholders, he pointed out, requires return-on-investment and performance, charging the new leadership of NAICOM to change some ridiculous rules that are not friendly to the shareholders in the industry.
“Despite the insignificance of profit before tax (PBT) of insurance companies in comparison to the banks, the minimum tax payable by both is comparable. In reality, it shows lack of understanding of insurance business.
“The Company Income Tax (CIT) limits unearned premium reserve. Claims paid are management expenses, all of which are reasonably incurred in the insurance ordinary course of business.
Therefore, insurance companies are penalized when paying claims. Ordinarily, these expenses should be considered as cost of sales and treated as allowable expenses”, he added.
But the NIA said that on the Company Income Tax Act, that the Association has made presentation to the Federal Inland Revenue Service (FIRS).
“We have approached all relevant government agencies and made our submission.
We provided them with facts and figures of what obtains in other climes and from the discussion we had we foresee a review of that position” he told Oriental News Nigeria.