3 months ago
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Some insurance stakeholders have commended the National Insurance Commission for managing ailing firms in the sector.
In separate chats with The PUNCH, the stakeholders noted that the decision of the Commissioner for Insurance, Olusegun Omosehin, to disclose the state of some firms in the insurance industry was laudable, as it would enable the players to brace up.
Omosehin, at an interactive session with journalists in Lagos last Wednesday, revealed that they were managing some ailing insurance firms in order not to disappoint the public.
He said, “Most of you have reported instances of some consumers going to some entities you know, not being able to get their claims paid. These are some of the issues we are dealing with. We have some ailing entities that we are trying to manage in order not to disappoint the public.
“This is our job, but also the desire moving forward is to reduce this incident so we don’t have too many entities falling into that category. That involves a lot of work and all of that we are doing currently. But the reality of the situation is that, yes, we have a few that we are managing, and we are hoping to get out of this.”
Omosehin also sounded a note of warning to those involved in the running down of insurance firms, saying they would be made to revive them.
He warned that managers who have been involved in the failure of insurance companies would be blacklisted and barred from taking up positions in the insurance industry and stressed that NAICOM was not interested in killing companies, but in ensuring that they were revived to ensure the protection of policyholders.
Associate Professor of Insurance at Lagos State University, Dr Olufemi Abass, said, “I want to salute the courage of the CFI for saying loudly that some insurance companies are ailing. Even if he does not speak, it is obvious that stakeholders know that there are ailing insurance companies. I don’t think it will cause any form of issues; he has not mentioned any names. “Secondly, I am not too sure that those firms are failing to meet their obligations. Of course, there may be symptoms that the CFI has seen and tried to alert the managers of these insurance companies to sit up. I do not think we need to press any panic button now.
“He has not mentioned any name but the insurance public may not be too okay with that but that does not mean we should not call ourselves to others. I do not think there would be any multiplier effect of the things he has said. These ailing insurance companies may still be able to meet their obligations, but not as soon as they are due. This is just for them to wake up and deal with the issues affecting them.”
The National Coordinator of the Independent Shareholders Association of Nigeria, Moses Igbrude, also applauded the decision of NAICOM to keep the firms afloat.
He said, “The strategy adopted by NAICOM and affirmed by the Commissioner of Insurance to manage troubled insurance companies is the best strategy for both consumers (policyholders) and investors, as well as staff. Companies don’t just go down; it is the managers of these companies who do. When companies go down, many stakeholders lose one way or another.
“This strategy of NAICOM-led management helps policyholders get their claims, the staff retain their jobs and investors also gain their investments when these companies are eventually sold to other core investors.”
However, a member of the minority investor community, Adedayo Adeleke, reasoned that a different approach could have been adopted instead of casting a shadow over the sector.
“In the insurance industry, as it is, the investing public does not have so much information about what is going on as a regulated sector. People believe that whatever the regulator says is the gospel truth because it is its job to regulate. Remember that insurance firms file records regularly with NAICOM and it issues circulars. They are in a position to know the health of each company.
“Now that the CFI has said what he said, it has cast a shadow over the health of insurance companies. By not even mentioning names, he has cast a shadow over the 60-something companies we have in the sector. Whether they are publicly or privately held, they have investors and they are not so sure if their investment is intact, or if the regulator can say there are issues.”
According to Adeleke, the CFI’s comment was ill-advised.
“As a regulator, I think they should have taken a different approach, to protect the industry, their clients and the investors in those businesses.
“Now, the entire industry is presumed to be sick, undercapitalised and underperforming, and that is not healthy for the regulator itself. To redeem the situation, the sector should mention the subsector where those firms are operating—general, life or composite. We need to know,” he said.
Another minority investor, Nornah Awoh, who spoke to The PUNCH, frowned at the exclusion of minority shareholders from the process of redeeming the ailing companies.
He said, “Minority shareholders are usually not part of the people who manage those companies before they go bad and yet when they say that they want to manage the companies so that they don’t lose value, minority investors are not brought into the picture.
“All the affected companies are being run down by the majority shareholders. What crime have the minority investors committed that they cannot have a say in the business? That is my challenge in all of this.”
English (US) ·