Following the recent withdrawal of operating licenses from two insurance companies by the National Insurance Commission (NAICOM), the insurance industry regulator is swinging its ax at more than five other insurance companies in the country, LEADERSHIP has learned SUNDAY.
NAICOM had in June this year revoked the licenses of Niger Insurance Plc and Standard Alliance Insurance Plc for failing to meet their civic obligations such as paying claims and failing to pay workers and debtors.
Investigations by this newspaper revealed over the weekend that five or more other insurance companies risk a similar fate if they fail to reverse the situation within the next two months.
Alliance and General Insurance Company Ltd, A&G Life Assurance Plc, Goldlink Insurance Plc, NICON Insurance Plc, Nigeria Reinsurance Corporation and Industrial and General Insurance (IGI) Plc are all struggling to survive with mountains of unpaid claims on their books.
Policyholders, we learned, regularly besiege companies, demanding their claims.
Inside sources revealed that insurance companies could be the next target for regulatory sanctions if things continue as they are at the affected companies.
International Energy Insurance (IEI) Plc and Staco Insurance Plc are also struggling to survive in the insurance industry currently and have been warned separately by the industry regulator.
While they obviously should be on this list, both companies have recently found new investors, a development that market watchers believe should lead to a positive change in the fortunes of the companies in the years to come.
Apart from the aforementioned companies, there are about 10 others looking for new investors to bring them to life, but only a few of them, including IGI and IEI Plc, have managed to convince investors to invest in them.
Others who have bad books that scare off investors are running against time, or else, will feel the wrath of NAICOM, it has been gathered.
The results showed that while the regulator is trying to be cautious, which is why it intervened very late in the case of Niger Insurance and Standard Alliance, it ignores that most struggling insurers project the image of the insurance industry in a bad light. , have therefore taken several approaches to save these companies.
In the case of Goldlink Insurance Plc and IEI Plc, the regulator had taken over their board at some point to bring them back to profitability, but the outcome of this step is not visible.
NAICOM had in the past limited daily spending by IGI Plc, IEI Plc and Staco Insurance to curb mismanagement at these companies and instill prudence in spending, but it appears the efforts are not yielding the needed results. .
In 2012, NAICOM suspended Alliance and General Insurance Company Ltd and A&G Life Assurance Plc from further business activity for six months.
A statement released by the commission later accused the companies of non-return of accounts, misrepresentation and non-disclosure of responsibilities.
He listed other breaches by the companies, including non-payment of bonuses and commissions and abuse of corporate governance.
But NAICOM’s plan for interim managers to take over the running of the two companies was met with litigation that lasted for several years as the companies’ fortunes continued to take a nosedive.
So far, litigation blocks positive regulatory intervention in companies.
With the death of IGI Plc owner Remi Olowude, the company struggled to survive as most stocks and businesses were built around him, with no serious succession plan.
Subsequently, after his death, companies did not come, even though corporate governance, mismanagement and unpaid debts increased, among other things, which required regulatory intervention in the company as early as 2015 and even until now.
NICON Insurance was the largest insurance player not only in Nigeria but in all of Africa before its privatization under the Olusegun Obasanjo administration.
But the exercise saw the arrival of businessman Jimoh Ibrahim to regain control, alongside the Nigeria Reinsurance Corporation. Although both companies got off to a good start after privatization, they began to struggle to compete midway through.
Recently, the two companies were in a legal battle with the Asset Management Corporation of Nigerian (AMCON) over a debt of around N69.4 billion as NICON Insurance owed claims amounting to billions of naira.
Although it has been learned that NAICOM is urging the authorities to save the two companies from the collapse and its negative impacts on the image of the insurance industry, the legal battle could be an obstacle to the mission. safety.
Meanwhile, IEI Plc and Staco Insurance Plc have secured new investors who are already repositioning the businesses for the better.
Last week, International Energy Insurance (IEI) Plc announced the takeover of the company by Norrenberger which had obtained approval from the National Insurance Commission (NAICOM) to acquire 100% of the capital of the company.
With development, the company’s fortunes could turn around, saving it from the regulatory hammer.
LEADERSHIP Sunday’s investigations further revealed that Staco Insurance Plc has also secured a new investor, and a new management controlled by the new investor is already in place to stabilize the company’s ship, pay the huge outstanding claims, settle the debtors and pump in enough capital for the day-to-day operations of the business.
IGI Plc, we also gathered, is seriously looking for investors to reposition the company, as is Goldlink Insurance Plc, which has very little time to recover its operating license.
Corroborating our findings, National Insurance Commission (NAICOM) Deputy Technical Commissioner Sabiu Abubakar at an event in Lagos said more companies could also face similar penalties under the measures. aimed at cleaning up the industry.
He said, “Recently, the licenses of two insurance companies were revoked. These are Niger Insurance and Standard Alliance Insurance. Although the management of the death / bankruptcy of a financial institution is very demanding, others can still be liquidated in order to clean up the insurance sector.
He pointed out that NAICOM has strengthened its regulatory oversight, imploring operators to resolve genuine complaints within a reasonable time and meet their obligations.
Abubakar noted that insurance regulation and supervision is still the foundation of national economic development, although he expressed hope that NAICOM’s regulatory reforms and initiatives will have a positive impact on the insurance industry if they are implemented. are achieved and that the sector will experience considerable development and growth.
In an exclusive interview with LEADERSHIP on Sunday yesterday, the Executive Secretary/CEO of the Nigerian Board of Registered Insurance Brokers (NCRIB), Tope Adaramola said the board has advised insurance brokers, who are its members, to be wary of troubled insurance companies when making choices for their customers.
As an intermediary, which brokers are, he said policyholders would rather hold brokers liable for defaults because he bought the policy through brokers and not insurers, hence the need for brokers to be careful when choosing whom to place their business with.
“As a board, we have always advised members to exercise due diligence and avoid sentiment when choosing insurance companies to place businesses at risk. This is essential because, any failure on the part of the underwriting companies could be misinterpreted as a failure of the brokerage fraternity, which would have negative effects on the entire brokerage industry,” he stressed. .
He said that while the NCRIB does not choose which insurer members it should deal with due to the sensitive nature such a decision could bring, members should always prioritize claims-paying ability and track record. to choose an insurer.
Praising NAICOM for its recent intervention, he said the sanity of the industry should be the regulator’s overriding objective to redeem the battered image of the insurance industry that has been created by a few bad eggs.
“Ultimately, claims are at the heart of the insurance business, whether as a broker, agent or operator, etc. It is therefore essential to deal with those who could fulfill this obligation,” he advised brokers.
Similarly, a player in the insurance industry, Akintunde Sunday, while commenting on a social media platform, “Insurance Practitioners Forum in Nigeria”, said the regulatory decision was fantastic, adding that many companies have been waiting for long liquidation.
He said: ‘Any insurance company that ignores the payment of genuine claims when due, with long outstanding claims of 5-10+ years, is not fit to stay in business. .
“Any insurance company in front of other underwriters, insurance brokers, Revenue Authority, pension fund trustees, Association of Nigerian Insurers, reinsurance companies and brown card claims of the ECOWAS does not deserve to stay in business.
“Any insurance company whose business philosophy is to use employees, to owe them unpaid wages, to force them to write off 50% of every year of operation with a fictitious and outrageous agreement and to employ victimization tactics to silence its employees who oppose such activities which are in opposite directions with the standard operating guidelines established by NAICOM are not suitable for continued operation.
“Any insurance company whose only product is N1,000.00 third-party insurance sold through the VIO is not fit to remain in business. Any insurance company operating with accounts approved in 2017 while those in 2018 at this day have not yet been approved is not fit to continue operating.
