The benefits of national insurance commission on Nigeria insurance
companies
By Akindele Olabode. T.
The benefit of a commission such
as the national insurance commission cannot be overemphasised because of the
cogent importance it plays in the development of insurance in any country.
However, it would be uncalled for if a brief history of the commission is not
discussed together with their objectives and functions.
The National Insurance Commission
is a statutory agency of the federal government of Nigeria established for the
regulation of the activities of the insurance businesses in Nigeria. What
brought about the establishment of the commission was the report of J.C Obande
commission in 1961. It led to the establishment of department of insurance in the
ministry of trade which later became the ministry of finance. This report also
led to the enactment of insurance company act 1961, which came to effect in
1967. The 1961 ACT focused mainly on the activities of direct insurer, made
provision for registration and record keeping. In 1968, insurance keeping
regulation was put in place to facilitate the implementation of ACT NO 58 of
1961 which then classified insurance business into different classes for
registration and relevant forms of record keeping.
Insurance decree NO 59 of 1976
was enacted putting together the provision of various laws. The 1979 Decree
among others made some other provisions. The company derives its regulatory
power from the National Insurance Commission ACT of 1997 and the insurance ACT
2003.
The principal objective of the
commission is to ensure the effective administration, supervision, regulation
and control of insurance businesses. By effective administration, it means the
commission is more concerned about the smooth running of all insurance
organization within the country; it does not want anything that could hinder
their smooth running. Supervision here means the commission monitors the
affairs of the insurance company within the country. This includes their
dealings with people, businesses, organizations and the foreign
transactions. They also supervise the
policies they make for the insurance companies. They make sure they are
properly implemented without hindrances. Regulation means the conduct of
guiding the affairs of the insurance industry. National insurance commission
does this and also controlling.
Accordingly,
insurance/reinsurance companies, insurance brokers, loss adjusters and agents
fall within the regulatory purview of the commission. The insurance commission
also has some other objectives which include giving expertise advice to the
insurance company. The insurance company can go to the national insurance
commission whenever they run into trouble. Such trouble could be as a result of
a particular policy they need to follow or how they would go about a particular
hullabaloo they are facing.
They also have the objective of
making the Nigerian Insurance company being able to compete with their
counterparts anywhere in the world most essentially advanced countries of the
world, they strife so hard to achieve this.
Upon discussing the objectives of
the national insurance commission, there is no doubt that the insurance
commission have some functions they perform. Some which includes;
Establish standards for the
conduct of insurance business in Nigeria. National insurance commission (NICOM)
has the function of creating standards which is expected to be met by Insurance
companies so as to enhance their efficiency. They create such standards to
enable insurance companies within the country to be able to match with other
companies in the world. Such standards are often gotten from the standards of
other country or legal procedures such as the basic elements of a contract like
the offer, acceptance, and consideration. Offer can be regarded to as a
proposal made by the prospective insured to the insurer. This is because it is
the insured that walks up to the insurance company to request a policy.
Acceptance can be defined as an agreement to the proposal made by the
prospective insured. In law of contract, consideration has being defined as
some right, interest, profit or benefit
occurring to one party, or some forbearance, detriment, loss or responsibility
given suffered or undertaken by the other. The standard may take a form of
capital outlay which is also referred to as re-capitalization in the Insurance
Industry which is recently 2 billion for life assurance, 3 billion for non-live
assurance and re-insurance business is 10 billion. The other standards could be
the laid down principles that insurance companies must use as a criteria before
they can accept anybody or companies risk.
Approve rates of insurance
premium to be paid in respect of all classes of insurance. It is the national
insurance commission that is saddled with the responsibility of approving the
rates that must be charged on risks the Insurance Company wants to acquire.
Insurance companies may suggest rates but it is the National Insurance
Commission (NICOM) that approves it, stating whether it is too high or too low
for the type of risk it wants to acquire. This is done in other for the
insurance companies not to have little or no differences in the rates charged
as premium on risks depending on how huge the risk might be.
Ensure adequate protection of
strategic government property. National Insurance Commission (NICOM) has the
function of acting on behalf of the government. In other words, the national
Insurance Commission (NICOM) accepts the risk of government at all levels and
ensures that they are protected strategically. Just like the central bank of
any country that serves as the government`s bank in performing
transactions on behalf of the government
so as the National Insurance Commission (NICOM) that performs insurance
transactions on behalf of the government. Such transactions include protecting
government properties, making discussions with the outside world on insurance
related issues.
Regulate transactions between
insurers and re-insurance in Nigeria and those outside Nigeria. An insurer can
be defined as an organization that accepts to transfer the risk of others,
business to itself while re-insurer can be defined as an organization that
transfer the risk of other insurance organization to itself. National insurance
Commission (NICOM) often regulates the transactions that exist among this
organization and that of other insurance organization outside the country.
Act as an advisory body to the
federal government on all insurance related matters. National insurance commission often gives the government
of the federal republic of Nigeria advice concerning insurance issues of its
country when the government is asked about the insurance issue of its country,
National Insurance Commission (NICOM) gives advice on what ought to be done,
how it should be done, how it should be insured. For example, if the government
wants to ship a commodity that the price is very high and it is of high value,
the insurance commission advise them on what to do and what ought to be done,
the appropriate steps they are to follow.
Periodicals, for sale and
distribution to the public, annual reports and statistics, on the insurance
industry. The national insurance commission prepares the yearly report on how
the insurance industry is doing, this report states the loss, profit made, net
premium, the insurance companies that performed excellently in that year and
some other things. These periodicals are
been sold and distributed to the public. Such periodicals help the individuals
in the country to know which insurance company is the best for any type of
insurance cover they want to acquire and it help them to know the insurance
company that is best for the type of property they want to insure. This annual
report does not help the prospective insured alone. It also helps the shareholders
to know the company that is best for them to invest their money and also
purchase shares that would yield huge dividend. The importance of these
periodicals cannot still be overemphasised because it reveals to the
international organizations, other countries of the world how well our
insurance companies are doing which might motivate them to establish their own
companies in Nigeria. The beauty of it does not stop there. Over the years,
incomes from insurance have been one of the greatest additions to the national
income of the country. This is revealed by the annual report published by the
National Insurance Commission (NICOM).
They keep insurance companies and
their members abreast of new information, new developments in the insurance
world. The National Insurance Commission (NICOM) also performs the duty of
making notice information from the insurance world to their members. They make
sure their members are not ignorant of the news, development in the insurance
world.
Apart from the functions of the
national insurance commission, they are also empowered to perform little duties
such as, (A)
Establishing a bureau to which complaints, against any insurer, reinsurer,
insurance broker or loss adjuster (in this Decree referred to as “insurance
institution”) may be submitted by members of the public.
(B)
Request or call for information from the federal ministries, extra-ministerial
departments, statutory bodies and other government agencies on matters relating
to insurance
(B)
Borrow such sum of money as the commission, may from time to time, require for
performing its function under this Decree and
(D)
Acquire offices and other premises of use of the commission
VISION, MISSION, AND CORE VALUES OF NICOM
VISION: to be among the leading
regulators of the insurance sector in the emerging markets.
MISSION: effective supervision of
the Nigerian insurance industry for the attainment of a high ethical standard
needed to position the industry as a leading market in the global economy.
CORE VALUE: transparency,
integrity, and efficiency.
Upon knowing a brief history
about the National Insurance Commission (NICOM), knowing what it sets to
achieve referred to as its objectives, and the functions they perform. We can
now transcend to the main issue which is their benefit to Insurance Companies
in Nigeria. By benefit, we mean how they
have been able to shape the Insurance Companies in other for it to be the best
among the best.
Firstly, they have been of
benefit to Insurance Companies in Nigeria through the provision of advice
whenever it is needed. The National Insurance Commission (NICOM) has benefited
many insurance companies through providing help inform of advice when it is
needed. They give such advice in other for the companies not to go astray. In
fact, in the organizational chart of the National insurance commission (NICOM),
they dedicated a whole department for this purpose. An advice of the National
Insurance Commission (NICOM) could go a long way. For example, a person who
wants to establish and Insurance company can go to the National Insurance
Commission (NICOM) to get a first class, genuine information on such rather
than getting a third class information. They will tell such person the steps
needed to be followed to achieve such goals, the initial capital that is needed
and the necessary incentives that might need to be played. The National Insurance Commission (NICOM) can
even go to the extent of allotting him agents from their commission that will
help in the establishment of the country without defying the principles of the
establishment of Insurance companies.
Secondly, the National Insurance
Commission (NICOM) has been a benefit to insurance company through some of
their policy. Just like the mission of NICOM for the creation of a strong
insurance industry as a leading market. National Insurance Commission has been
able to make the Nigerian insurance companies strong and able to face any
`stumbling blocks` that could come their way. The insurance companies benefit
this one from insurance companies. In terms of capital, NICOM as recreated
their capital base for stronger insurance companies.
Thirdly, equipped them to be able
to compete with their international counterparts, The National Insurance has
equipped insurance companies in Nigerian to
be able to stand with other
insurance companies in the world. This is done through mandating them to
have some essential equipment that wills match that of the international
companies. Also, they tell them the new technologies that must be in place for
the development of their companies. in terms of human capital too, they
stipulate the qualifications that the leaders of the insurance companies must possess before
the can perform in such positions.
Also, insurance companies benefits from the National
Insurance Commission in terms of training.
NICOM dimed it fit as part of their functions to always train the staffs
recommended by the insurance companies with the state-of-the-heart facilities.
They train them the same way they are trained in advanced countries; they train
them to become experts, they even get people from other part of the world to
handle the training process. They also
provide scholarships for the best and willing people.
Lastly, they scrutinize and check
the leadership of insurance companies. Before anybody can be the managing
director of insurance companies, they are properly checked by NICOM so that
there won’t be a misconception in the choosing of leadership. This is a benefit
for insurance companies because it gives them the privilege of being ruled by
the most qualified persons so as not to cause problems in the nearest future.
This is a very important factor because it demines the success or failure of
such company and NICOM always want the industry to perform at its best.
Well, after discussing about the
main topic which is the benefits of national insurance commission, it is
advisable to look at the general overview of the national insurance commission
on the country at large. Just stating how the benefits has been able to bring
about development in Nigeria.
(1) It has brought about the
reduction of fraud. How then is this possible? It is possible in the sense that
the national insurance commission provide the yearly report of how the
insurance company is doing. Through this process, all the registered insurance
company would be listed in the annual report. Therefore, a person who wants to
acquire a policy can refer to that book to know the registered insurance
company and not get duped by just going to any mushroom insurance company.
(2) Provision of appropriate
insurance company for covers. By this, it means that the report will provide
each insurance company with the activities they specialize on, so when a person
wants to acquire a cover, such person can pick up the report to know where best
to go.
(3) It creates job opportunity.
This is done through the development of National Insurance Commission (NICOM)
into departments so has to be undertaken by different people. Also, the need
for agents that assists people just coming into the insurance business also
creates jobs.
(4) It increases the standard of
living. Since job is being created, people will have money to buy the
commodities that will satisfy their immediate want thereby increasing their
standards of living.
