Barely one month after it released the proposed State Insurance Producer, SIP policy, the National Insurance Commission of Nigeria (NAICOM), is facing another hurdle in its planned implementation of the policy as insurance brokers have threatened to challenge the policy in court.
This is coming barely three months after some industry operators also approached the court to challenge the legality of the NAICOM’s Tier-based capital solvency regulatory requirements policy measure for risk underwriting companies in the country.
At the forefront of the latest opposition to the proposed SIP is the Nigerian Council of Registered Insurance Brokers, NCRIB, and the Transparent Protection Ltd./Gte (TPL) a Non-Governmental Organisation (NGO) which works for the promotion of insurance culture in Nigeria.
Already, the NCRIB and the NGO had served the commission a 30-day pre-action notice while the former confirmed that it had engaged the service of a legal firm to fight this course.
The NCRIB President, Shola Tinubu, who gave this hint while speaking at NCRIB Members’ Evening in Yaba, Lagos, said SIP was a threat to broking business in view of the fact that 70 per cent of brokers’ businesses come from government.
He said: “In view of this, we have appointed a legal firm consisting of three Senior Advocates of Nigeria (SAN) and would be engaging NAICOM on our behalf.
“Our lawyers have already served NAICOM, and in view of this notice, we can have dialogue. This is to protect the interest and businesses of insurance brokers”, Tinubu stressed.
According to him, if the policy is allowed to take effect it will create crisis in insurance broking profession as well as insurance industry.
The industry top player maintained that brokers would resist any action that will allow non-professionals hijack 70 percent of their business, adding that the legal action will ensure that the issue is pursued to a logical conclusion.
Earlier, a group, Transparent Protection Ltd./Gte (TPL) had indicated its intention to challenge NAICOM in court over the SIP guidelines which seek to create corporate insurance agents in the states.
According to the organisation’s Programme Director, Godson Ibekwe-Umelo, the TPL which is a pro-active, rights-based non-governmental organisation working for the promotion of insurance culture in Nigeria, believes that in making the guidelines which are billed to come into effect on January 1, 2019, the regulatory body acted in excess of its powers as enshrined in the National Insurance Commission Act 1997 and Insurance Act, 2003.
It would be recalled that the NAICOM recently released the guidelines for SIP business which is expected to commence January 1, 2019 and pegged the operational licence at N2 million.
In order to ease the process of licensing, the commission simplified the payment of licensing fee by allowing the SIP pay from the first commission earned, a step taken to free state governments from financial burden in getting the licence.
In the guidelines, the industry regulatory institution stated that there would be a signed undertaking by an officer of the State Government not below the rank of a Permanent Secretary that the state undertakes and agree that the sum N2 million be deducted from accrued commission to be earned by the Licensed State Insurance Producer before payment of commission is made to the coffers of the Government.
The Commissioner for Insurance, Mohammed Kari, had explained at the release of the guidelines that the SIP business model would bring about 200 to 300 percent insurance penetration in two years and by implication, boost the revenue base of state governments and profits of risk underwriting companies.
While highlighting additional benefits accruable from the SIP initiative, the industry regulator maintained that it would help to meet the government’s expectations with regards to Economic Recovery and Growth Plan (ERGP) in the area of job creation, poverty prevention and confidence in the face of risks.
