The National Insurance Commission (NAICOM) has unveiled plans to intensify its monitoring of insurance consumers and insurers foreign underwriting deals with a view to ensuring that risks that can be covered locally are not transferred to foreign underwriters.
The Commissioner for Insurance, Alhaji Mohammed Kari, gave this hint during an interactive session with major consumers of insurance products and services in Lagos.
The leading insurance expert therefore warned insurance consumers and operators against placing such business risks under foreign underwriters.
According to him, recent findings by the Commission showed that some actions of consumers were detrimental and dangerous to the growth of the nation’s insurance industry.
Kari clarified: “We have seen situations where the insured in connivance with insurance brokers allot proportion of risks to local underwriters without due cognisance of the insurers’ capacity; preferring to place risk abroad even when the local market is not saturated”.
While noting that some consumers in collaboration with intermediaries chose to exclude some underwriters from participating in underwriting certain risks without tenable justification, the industry chief regulator cautioned such consumers to desist from the practice in view of its illegality and potential harm for the industry
He explained further that while the commission was not averse to ceding of risk offshore, such cession must be done only when the local market had taken what its capacity would allow.
He listed other areas in which the commission had issues with insurance consumers, to include, delays in submitting evaluation results of bidding processes to the Commission as well as the insured issuing placement/renewal instruction to the insurer which more often than not, usually make it impossible for the insurer to meet the application period for the placement of excess risks offshore where applicable.
Kari also bemoaned the emerging practice of supposed premium funding by local brokers on behalf of the insured, adding that all these abuses are not only dangerous to the insurance industry but also to the consumer.
He therefore solicited the understanding and cooperation of the consumers to ensure compliance with the laws and regulations guiding insurance practice and operations, particularly the Insurance Act 2003 and the Local Content Act.