Following the recent withdrawal of operating licenses of two insurance companies by the National Insurance Commission (NAICOM), the insurance industry regulator is dangling its axe loosely on over five other insurance companies in the country, LEADERSHIP SUNDAY has learnt.
NAICOM had in June this year withdrawn the licenses of Niger Insurance Plc and Standard Alliance Insurance Plc over their failure to meet their civic obligations such as payment of claims and inability to pay workers and debtors.
Investigations by this paper revealed at the weekend that five or more other insurance companies risks similar fate if they fail to turn things around in the next couple of 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 for survival with mountains of unpaid claims in their books.
Policyholders, it was learnt, have been besieging the companies on a regular basis, requesting for their claims.
Insider sources revealed that the insurance firms could be the next target of the regulatory sanctions if things continue as they are in the affected firms.
International Energy Insurance (IEI) Plc and Staco Insurance Plc are equally struggling for survival in the insurance industry currently and have been warned by the industry regulatory body severally.
While they obviously should be on this list, both firms have recently secured fresh investors, a development market observers believe should lead to a positive change in fortune of the firms in the years ahead.
Aside the aforementioned companies, there are about 10 others searching for fresh investors to breathe life into them, but only few of them, including IGI and IEI Plc, have been able to convince the investors to invest in them.
Others who have bad books that are scaring away investors are running against time, or else, will feel the wrath of NAICOM, it was gathered.
Findings showed that while the regulatory body is trying to be cautious, which was why it intervened very late in the case of Niger Insurance and Standard Alliance, it is unaware that most of the struggling insurers are projecting the image of the insurance industry in bad light, hence have adopted several approach to save these firms.
In the case of Goldlink Insurance Plc and IEI Plc, the regulator had taken over their board at some point in time to bring them back to profitability but the result of this step is not visible.
NAICOM had, in the past, restricted the daily spending of IGI Plc, IEI Plc and Staco Insurance to curb mismanagement of these firms and institute prudence in spending, but it seems the efforts are not yielding the needed results.
NAICOM had in 2012 suspended Alliance and General Insurance Company Ltd and A&G Life Assurance Plc from transacting further business for six months.
A statement issued by the commission then accused the companies of non-rendition of accounts, misrepresentation and non-disclosure of liabilities.
It listed other offences of the companies to include non-remittance of premiums and commissions, and corporate governance abuses.
But NAICOM’s plan for interim managers to take over the management of both firms was met with litigation that dragged on for several years while the fortunes of the companies continued to nosedive.
Till now, the litigation is stalling positive regulatory intervention in the firms.
With the death of the owner of IGI Plc, Remi Olowude, the company struggled to survive, as most of the actions and businesses were built around him, with no serious succession plan.
Subsequently, after his death, businesses were not forthcoming, even as there was breakdown of corporate governance, mismanagement, and unpaid claims rose, among others, which necessitated the regulatory intervention in the firm as far back as 2015 and even till now.
NICON Insurance used to be the biggest insurance player, not only in Nigeria, but across Africa prior to its privatization under the Olusegun Obasanjo administration.
However, the exercise saw the coming of businessman, Jimoh Ibrahim, to take over its ownership, alongside Nigeria Reinsurance Corporation. Although the two firms started well post-privatisation, they began to struggle to cope with competition midway.
Recently, both companies were in a legal tussle with the Asset Management Corporation of Nigerian (AMCON) over debt of about N69.4 billion, as NICON Insurance were owing claims running into several billions of Naira.
While it was learnt that NAICOM is engaging authorities to salvage the two firms from collapse and its negative impacts on insurance industry’s image, the legal tussle may serve as an obstacle in the rescue mission.
Meanwhile, IEI Plc and Staco Insurance Plc have gotten fresh investors who are already in the process of repositioning the companies for better.
Last week, International Energy Insurance (IEI) Plc announced the takeover of the company by Norrenberger who had obtained the approval of the National Insurance Commission (NAICOM) to acquire 100% equity holding in the company.
With the development, the fortune of the company may turn-around, saving it from the regulatory hammer in the process.
LEADERSHIP Sunday investigations further revealed that Staco Insurance Plc has also gotten fresh investor, and a new management controlled by the new investor is already in place to steady the ship of the company, pay up the huge unpaid claims, settle the debtors and pump in enough capital for the day-to-day operations of the company.
IGI Plc, it was equally gathered, is seriously searching for investors to reposition the company, the same as Goldlink Insurance Plc, who have a very short time to salvage its operating license.
Corroborating our findings, the deputy commissioner, Technical, the National Insurance Commission (NAICOM), Sabiu Abubakar, at an event in Lagos, said more companies may also face similar sanction as part of moves to sanitise the industry.
He said, “Recently two insurance companies’ licenses have been withdrawn. These are Niger Insurance and Standard Alliance Insurance. Though managing the death/failure of a Financial Institution is very demanding, nevertheless, more may still be liquidated in order to sanitise the insurance sector.”
He stressed that NAICOM has strengthened its regulatory oversight, imploring operators to settle genuine claims within reasonable time and discharge their obligations.
Abubakar noted that insurance regulation and supervision are always the bedrock of national economic development, even as he expressed hope that NAICOM’s reforms and regulatory initiatives will positively impact the insurance industry if achieved and that the industry will witness tremendous development and growth.
In an exclusive interview with LEADERSHIP Sunday yesterday, the executive secretary/CEO, Nigerian Council of Registered Insurance Brokers (NCRIB), Tope Adaramola, said the council has advised insurance brokers, who are its members, to be wary of distressed insurance companies when they are making choices for their customers.
As intermediary, which brokers are, he said policyholders would rather hold brokers responsible for claims default because he procured the policy through brokers and not the insurers, hence, the need for brokers to be careful when choosing who to place their businesses with.
“As a council, we have always advised members to do due diligence and shun sentiment when they want to choose insurance companies to place risk businesses. This is critical because,any failure on the part of underwriting firms could be misconstrued to be a failure of broking fraternity, thereby rubbing off negatively on the entire brokerage industry,” he pointed out.
He said while NCRIB will not choose insurers members it should deal with because of the sensitive nature such decision could bring, members should always prioritise claims paying ability and track record to choose an insurer.
Commending NAICOM for its recent intervention, he said the sanity of the industry should be the upmost aim of the regulator to redeem the battered image of the insurance industry that was created by few bad eggs.
“In the end, claims is central to insurance business, either as a broker, agent or operator and so on. Hence, it is essential to deal with those who could fulfill this obligation,” he advised brokers.
Similarly, an insurance sector player, Akintunde Sunday, while commenting on a social media platform, ‘Insurance Practitioners Forum in Nigeria’, said the regulatory move is fantastic, adding that many firms are long overdue for liquidation.
He stated: “Any insurance company that has no regard for genuine claims payment as at when due, with long standing outstanding claims of 5 years up to and more than ten years, is not fit to remain in operation.
“Any Insurance company owing fellow underwriters, Insurance Brokers, Tax Authority, Pension Fund Administrators, the Nigerians Insurers Association, Reinsurance companies and ECOWAS Brown Card claims do not deserve to remain in operations.
“Any Insurance company whose corporate philosophy is to use employees, owe them outstanding salaries, force them to cancel 50 per cent each operating year with fictitious and scandalous agreement and employ victimisation tactics to silence its employees opposing these activities which are in opposite directions with the standard operating guidelines laid down by NAICOM is not fit 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 operations. Any Insurance company operating with 2017 approved accounts while those of 2018 to date are yet to be approved is not fit for continued operation.”