The National Insurance Commission (NAICOM) will henceforth punish insurers who act against the local content policy.
The regulator has discovered that some operators either fail or refuse to consider country capacities of insurance and reinsurance institutions, such as pools, reinsurers and other locally recognised capacities, prior to applying for approval to cede certain proportion of some risks offshore.
The Commission broke the news in a circular titled: “Utilisation of In-country Capacities of Nigerian Insurers, Reinsurers and Pools Prior to Foreign Facultative Reinsurance” released to operators and signed by the Commissioner for Insurance, Mohammed Kari.
He said the Commission will not only impose regulatory actions against erring institutions, but will also decline, or reject such requests.
Kari pointed out that in some situations where the pools, insurers or reinsurers were offered participation, the institutions were either offered minimal proportion below their capacity, or informally restricted and, or compelled to accept lower than their respective capacities for the purpose of justifying cession of the risks offshore.
He said this unethical practice which undermines “our collective resolve to ensure full utilisation of available in-country capacity in line with domestication and the local content policy, contravenes extant insurance laws and regulations, and shall not be tolerated henceforth.”
He said: “Additionally, the Commission has observed that some insurance institutions have inappropriately arrogated to themselves the authority to unilaterally exclude some insurers over alleged outstanding claims.
“It has, therefore, become imperative to remind all insurance institutions that they are required to report any alleged non-settlement of claims to the statutory grievance/complaint redress mechanisms for appropriate action prior to determination of their participation.
“Accordingly, we hereby restate that all institutions are required to ensure that Nigerian insurers, reinsurers and pools in the Commission’s records, must be offered and allowed to willingly decide the proportion of the risk they wish to accept subject to their respective capacities, before any application for approval for offshore placement of the excess; all recognised reinsurance treaties and arrangements and additional capacities offered by local reinsurers and pools must be fully utilised before excess consideration for offshore placements.”
He said all ‘off-the-system’ or informal directives to coinsurers, local reinsurers and pools to accept lower than their desired available capacities are hereby prohibited,” and calling for strict compliance.
Kari warned that NAICOM “will not tolerate any breach of these directives. Failure to do so will henceforth result in the imposition of appropriate regulatory actions as well as declinature or rejection of such requests.”
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