Cynthia Ezekwe
As the National Insurance Commission (NAICOM) grapples with the aftermath of recent management changes, a prominent industry expert has urged the organisation to embrace comprehensive reform as a matter of urgency.
Sam Chukwuka Onyeka, a respected voice in the field, has called upon NAICOM to take swift action to ensure the smooth operation of the organisation and safeguard the overall health of the insurance sector.
Onyeka, who is the lead director of Transparent Protection Limited/GTE (TPL), a non-profit organisation dedicated to fostering the development of Nigeria’s insurance sector, recently spoke at a press conference, shedding light on the critical need for substantial reforms within the National Insurance Commission (NAICOM). He noted that NAICOM’s current practices are inadequate and pose significant risks to the overall functioning of the insurance sector.
Appealing for support from all stakeholders to facilitate the growth of NAICOM and the insurance industry as a whole, the insurance advocate highlighted several key areas where urgent remedial steps must be taken. According to him, failure to address these issues could result in a sector-wide collapse, a grim scenario that would have far-reaching consequences for both businesses and consumers alike.
The lead director at TPL submitted that it is no longer news that since January 2024, regulatory and supervisory activities at the National Insurance Commission have been running at a rather unusually slow pace, stating that the inefficiency of the commission risks destabilising the entire insurance sector. He urged swift and thorough reforms to prevent this from happening.
Highlighting the challenges impeding the growth of the sector, Onyeka said, “Ever since its establishment in 1997, NAICOM has faced many challenges including funding, limited technical capacity, poor infrastructure, political interference and corruption. To alleviate the funding challenge, from the beginning, the government had, under the provisions of the NAICOM Act 1997, established the Insurance Supervisory Fund (the ISS Levy). This fund is constituted by one percent of the gross (premium or commission) earned by the insurance institutions in Nigeria.’’
He further explained that the challenge of attracting and retaining qualified and experienced staff is a major issue, noting that NAICOM has been unable to replace its staff as fast as they are being lost through retirement, a major concern that needs swift action to be taken.
Onyeka noted that in recent times, NAICOM’s staff recruitment has been driven more by political considerations, stressing that the Commission has been unable to guarantee its staff members the minimum training required for the job.
“There is also the challenge of undue political interventions which has made it difficult for NAICOM to take urgent regulatory and supervisory actions, including by licence cancellation, against erring insurance institutions,” he said.
Onyeka explained that the commission is not shielded from corruption, stating that the management and some staff of NAICOM have been caught in the web of corrupt practices. He added that this has led to a situation in which regulatory and supervisory activities have significantly deteriorated, putting the survival of the Nigerian insurance industry at risk. He therefore warned that without swift and effective measures to combat corruption and improve regulatory oversight, the industry is poised to collapse.
“Even with close monitoring of the activities of the insurance institutions, as it used to be, it was difficult to guarantee 50 percent efficiency in market discipline. It follows logically, therefore, that in the absence of effective regulation, as is currently the case, it must be taken for-granted that in less than no time, the insurance industry in Nigeria will finally collapse,” he posited.
Speaking on the commission’s financial position he said, “It should be recalled that in December 2023, the federal government implemented a 50% compulsory deduction from the revenues of some federal government revenue generating agencies. NAICOM was erroneously considered as being among the revenue generating agencies. However, NAICOM is purely a regulatory agency which derives its funding from statutory levy paid by insurance institutions in Nigeria.”
As an indication of the severity of the problem, Onyeka highlighted low public confidence in the insurance industry in Nigeria, with recent cases of non-payment of legitimate claims by some insurers. According to him, discrete enquiry at NAICOM revealed that no less than 8000 complaints of unsettled claims are lying untreated at NAICOM’s Complaint Bureau.
The insurance expert attributed this alarming level of inefficiency to insufficient funding for NAICOM, a key contributor to the regulatory agency’s inability to effectively carry out its duties.
Onyeka proposed immediate measures to address the current crisis facing NAICOM, warning of the imminent collapse of the insurance industry in Nigeria. His suggestions included:
– Immediate removal of NAICOM from the 50 percent statutory revenue deduction to address the regulator’s funding challenges.
– Restructuring NAICOM operations by relocating supervisory functions to Lagos, where most operators are located, and rationalising staff to improve efficiency.
– Building strong IT capacity to ensure effective regulatory oversight in the digital era.
With a growing sense of urgency, Onyeka emphasised that all stakeholders, including the federal government, must act swiftly to avert the impending collapse of the insurance industry in Nigeria.
