A non-profit insurance organisation, Transparent Protection Ltd/GTE, has said the management of the National Insurance Commission (NAICOM) should consider urgent reforms including staff rationalisation, relocating its supervisory operations to Lagos where the operators are concentrated, and building a strong IT capacity to enable it to carry out supervisory duties effectively.
TPL said the call was necessitated by the fact that the commission was running at a rather languid pace due to a lack of funds and manpower to discharge its duties. “Although NAICOM like several other federal government’s institutions in Nigeria has always been relatively inefficient, at the moment, the inefficiency at NAICOM has become a matter of serious concern to stakeholders, and this must quickly be addressed to save the industry from imminent collapse,” lead director at the Transparent Protection Ltd/GTE, Dr. Sam Chukwuka Onyeka said at a press conference in Abuja at the weekend.
He blamed much of the problem on the recent implementation of 50 percent revenue deduction policy of the federal government which he said has further stifled the commission and its ability to effectively oversite the industry, a situation he said portends danger to the survival of the insurance industry in Nigeria.
“Without effective regulation, the industry in Nigeria will soon collapse. Even with close monitoring of the activities of the insurance institutions, as it used to be, it was difficult to guarantee 50 per cent 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 stated. In December 2023, the federal government implemented 50 per cent compulsory deduction from the revenues of some federal government revenue-generating agencies.
Dr Onyeka said there is a need to have a risk-based supervision by the NAICOM to save the industry from imminent collapse and the only way NAICOM can do that is to rationalise operations and leverage on technology to drive its processes,” he explained.
He further urged the insurance regulator to make its complaint bureau a department headed by a director to speedily address the mirage of complaints by Nigerians and boost efficiency
Onyeka alleged that the insurance industry in Nigeria is at the verge of collapse with funding being the most critical challenge at the moment.
In the immediate, TPL recommended that the federal government should consider removing NAICOM from the application of the 50 per cent statutory revenue deduction.
“In the long run, the federal government may think of increasing the percentage of the insurance supervisory levy, but apart from requiring amendment of the existing law, this may amount to indirect taxation on policyholders which may further drive the masses into poverty,” Dr Onyeka stated, adding that “This is the time to save the insurance industry in Nigeria from imminent collapse. All hands must be on deck.”