Fola Daniel, Commissioner for Insurance, National Insurance Commission (NAICOM): Interview

Interview: Fola Daniel

What can be done to ensure that insurance profits derived from oil and gas are kept in Nigeria?

FOLA DANIEL: We encourage local insurers to build capacity, as this will help halt the capital flight currently being experienced in the oil and gas segment. With limited local insurance capacity, larger risks have traditionally been ceded abroad. We are therefore making efforts to manage more risk locally. We used to have legal session, but removed this to liberalise the market.

We have increased the capital requirement for local reinsurers to N10bn ($61m) to improve capacity. There are two reinsurance companies in Nigeria, and we believe the opportunities for growth in the local reinsurance industry are substantial, as local reinsurers would be closer to the local players. There is a need to expand reinsurance capacity to keep pace with economic growth and infrastructural development. Many foreign reinsurers have approached us with requests to establish local offices in Nigeria; presently we are reviewing our laws to ensure that foreign reinsurers maintain assets in Nigeria equivalent to their liabilities.

In what ways can educational programmes help prevent fake insurance policies?

DANIEL: Those who sell fake policies pose as legitimate agents. Being unregulated, they can lure customers at various locations, especially outside vehicle licensing offices, by claiming to sell the policies of well-known insurance companies. In 2012, NAICOM launched a national awareness campaign on television and in newspaper advertisements that warned the public of the dangers that could come from patronising the fake policy sellers. Several raids were conducted alongside the police and other law enforcement agents to sites where these policies are frequently sold in various parts of the country, and the police arrested several suspected fake agents. These fake policies are created by compiling certificates based on a copy of a genuine policy. Policyholders can now check via text message or online whether their vehicles are actually insured through the Nigerian Insurance Industry Database, which was set up the by Nigeria Insurers Association.

What kind of challenges have you observed in the enforcement of mandatory insurance legislation?

DANIEL: Under the Market Development and Restructuring Initiative rolled out in 2008, we set out a massive awareness campaign to help the public realise that they are breaking laws if they do not take up compulsory insurance such as motor, group life, professional indemnity for medical personnel and occupier liability for building. This effort has been producing significant growth in the Nigerian insurance market, although there are still many challenges outstanding.

Mandatory motor insurance enforcement is in the hands of the police, as it is a criminal offence to drive an uninsured vehicle on the street. We have been collaborating with the vehicle licensing office to ensure that they register and renew licenses with evidence of valid insurance. There are also plans to digitise this process so that fake insurance policies will not be used.

How would you rate the sector’s innovations in terms of product offerings?

DANIEL: A diagnostic study was conducted in 2012. Many insurance companies have been looking into new products and have undergone product development training by the Nigerian Insurers Association to ensure that such products meet the needs of the public. Several stakeholder workshops have also been held, which have incorporated policy-makers, micro-finance banks, cooperatives and faith-based institutions.

Although there are around 100m mobile phone users in Nigeria, many still do not hold an insurance policy. Since then, three mobile phone operators have teamed up with insurance companies to launch life insurance via mobile phone. This is based on airtime credits and has been very successful, with a growing number of subscribers. We have thus worked to roll out insurance policies that can ensure proper consumer protection.