Checking Corruption Fever in Insurance Industry

Reports of corrupt government officials who manage federal government assets have become a source of worry to insurance managers, writes Ebere Nwoji

Recent revelation that  in 2014, only 10 percent of N2 billion budgeted  for insurance of government assets was utilised while the rest was diverted by the various government agencies to other sources outside insurance has been a source of concern to insurers.

Against this backdrop, in 2015, though the actual figure utilised has not been disclosed, it will not be totally wrong to insinuate that less than the above percentage would have been spent on insurance of government assets, given that nobody has been punished for the previous offence committed.

There has also not been news about any of the government officials in charge of insurance in the various agencies facing prosecution or directed to pay claims on any of  the damaged government  properties. Yet, there have been cases of public buildings belonging to government damaged in recent times.
For instance, in May 2015, a building complex in the Federal Secretariat Abuja, housing the education ministry was razed by fire but up till today, nobody has heard about claims payment on that.

A month before that, precisely in April, 2015, the popular Maman Katangora house, along Marina Lagos,  belonging to federal government was also gutted by fire but there has not been any report on claims demand  by government or payment by any insurance  firm.

These are just but few cases at hand, raising  the question on whether diversion of funds meant for insurance of government assets is not worth investigating especially at  this time the present administration is determined to fight corruption.

What the above scenario means is that though government, on annual basis in the budget, makes provision for insurances of its assets, these assets are hardly brought under insurance cover but the money is spent on yearly basis.

Before now, insurance personnels in these agencies agree with dubious insurers to pay a token as premium to fulfill all righteousness under the agreement that in the event of any risk on the asset in question, they would not ask for claims. The effect of this is that in the past years, many government houses damaged by fire or by any other means remained like that for years until government decides to replace it or use it for another purpose.

This continued to happen until the National Insurance Commission (NAICO), rose to its responsibility and insisted  that any insurer, who indulge in such act is doing so to his detriment because as adviser to government on insurance, it would make sure that such insurers, pay claims to the last kobo when such claims come irrespective of how much premium collected.

The government insurance personnel, on account of this, devised another means; this time, they will agree to pay  the standard premium rate but  will not release the premium to the insurer but when risk occurs, they will come for negotiation to subtract the premium from the claims and be paid the balance .Some insurers, who are unprofessional in their practice were indulging in this until NAICOM came up with ‘No premium No Cover’ implementation in January, 2013.

Apparently, the action of the perpetrators of this ugly act is double blow to the economy.

Double blow in the sense that diversion of the money that would have gone to the insurance industry to other areas, inhibits the growth of the industry’s premium and chances of paying returns on investment.

On the other hand, nonpayment of claims, on the damaged public assets as a way of mitigating against risk is a total loss to the economy especially at this time Nigeria is passing through serious economic depression and needed to protect its hard earned assets.

This is not the first time the ugly incident is happening, indeed, insurance vote by federal government every year is often regarded as free for all money that can be embezzled by anyone without the least probe.

This is so, whereas all those who embezzled pension money under the old pension scheme, were brought  to book while the new pension scheme, has been packaged in such a way that it will be difficult for anyone to tamper with it.

For the Insurance industry, there is no such protection. The result of this is that in its eleven years of establishment, the contributory pension scheme currently has accumulated over five trillion Naira asset while in its over hundred years of operation in Nigeria, insurance has accumulated only N300 billion.

This is not only the problem, in the public arena, insurance operators cannot proudly  stand before pension fund managers just as they can’t stand before bankers as they are looked upon by the duo as inferior and wretched people.

THISDAY recalled what happened between insurers and Pension Fund Managers when the National Pension Commission (PenCom) in collaboration with NAICOM, jointly organised a workshop on Annuity for the two sub-sectors.

The way Pension Fund Managers addressed the insurers over involvement or not in annuity management leaves much to be desired.
Although the two regulators, NAICOM and PenCom, later resolved the issue, actions at the workshop venue showed that insurers, worth nothing in the sight of the pension fund managers. The reason is not far fetched, the pension asset of one big pension Fund manager like I BTC pensions is more than the premium income of the entire insurance industry and he who pays the piper dictates the tune.

Closely connected to this, is the fact that some pension fund managers, used some unprofessional insurers’ dubious actions to judge the entire industry  operators by insisting that insurers should not be allowed to participate in the annuity fund management business, insisting that they would  definitely spoil the business and mismanage the money.

Obviously, insurance industry’s fortunes would have been much better if government was willing to spend part of its budget on the industry for its own benefit.

It is certain that government is the highest spender in any economy and any industry that enjoys government patronage witnesses speedy growth.

Insurance industry has not been lucky enough in this regard as generally, government, has not shown genuine interest in patronising the industry  and even the little patronage it gives to the industry, the money hardly gets to the right people.

This is despite the promises given by government, few years back at the official implementation of compulsory insurance of public buildings and buildings under construction.

Government had  promised that it would ensure that not only that all its assets including official vehicles are insured  but that funds, meant for insurance in the budget, gets to the insurers.

Unfortunately, despite these promises, insurers’ fate over premium payable on  government assets is still hanging and government agency like the EFCC is keeping quiet while officials of public procurement bureau and other allied agencies feel less concerned.

Irked by this, insurers have decided to take their fate by their hands through personal efforts.

One of these efforts is the latest decision by insurance brokers, to stage public enlightenment campaign on insurance of government assets this year.

Recently, the president of Nigerian Council of Registered Insurance Brokers (NCRIB), Mr Kayode Okunero had  told the media that his members will embark on a major sensitisation programme titled ‘National Risk Alert to point the way forward to government on its insurances.

Okunero, speaking on the proposed campaign stated, “There could not have been a better time to raise the issue of insurance of nation’s national assets than now, in view of the present administration’s disposition to prudence in management of the nation’s resources.

It is our thinking that inputs should be solicited from the insurance industry in the government’s economic policies. As it is today, many of the nation’s assets are uninsured by government,through its ministries and agencies, despite the promulgation of the law on compulsory insurances.

“We must not forget that aside from providing investible funds, insurance, is one of the financial management strategies that must be factored into genuine economic revival development initiatives. In this vein, our Council wishes to commence a sensitisation campaign under the slogan, “National Risk Alert” ,to continually draw attention of government to its risk exposures,” he stated.

Prior to the brokers’ proposed campaign, NAICOM had advised Ministries, Departments and Agencies of government (MDAs) to ensure compliance with the provisions of extant laws, in relation to insurance of government assets, as well as support the industry as risk bearers in the economy.

The Commissioner for Insurance, Mohammed Kari, speaking at a meeting with the management of Nigerian Customs  service in Abuja,  advised the Custom Service, to explore the window of opportunity by ensuring that the NCS complies with the provisions of the law in all its insurance activities. He pledged the full support of NAICOM to NCS, in the insurances of its assets and liabilities.

He also called on all MDAs, to set up insurance desks or units in their various offices and ensure that they are manned by qualified insurance professionals to handle the insurance of their assets. This is targeted at cutting   down on cases of diversion of insurance money from government and ensure adequate provision of insurance cover for all government assets.

He stressed that advising the government and all its agencies on insurance matters is one of the key functions of the commission and was prepared to offer this service to ensure adequate insurance and protection of all government assets.

On its part, the Nigeria Insurers Association (NIA) did not keep quiet over the matter. Its Director General, Sunday Thomas, late last year, raised the alarm over non compliance with the compulsory insurances especially  as it concerns government assets.

The immediate past president of the association, late Remi Olowude of the Industrial and General Insurance, had in his last press briefing before  his demise, accused government of paying lip service to the industry.

He accused government of denying the industry patronage and encouraging poaching and transfer of insurance policies to other sub sectors.

While this is so, insurers have expressed high hopes on the willingness  of  the present administration to better the lot of the industry .They have also expressed optimism that the administration, would bring a major turn around to the industry especially in the area of probing  and putting to a stop the prevailing act of diverting insurance premium for government assets to personal or other  uses and payment of N10 billion owed to the industry by government as promised by the Minister for Finance Kemi Adeosun.


Source: Thisday