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NAICOM to tighten regulatory oversight on foreign investors

By on February 17, 2015

Deputy Commissioner (Finance and Administration), National Insurance Commission (NAICOM), Mr. George Onekhena, has said the commission would strengthen its regulatory oversight to ensure that foreign insurance companies operating in the country do not take undue advantage of the cash potentials in the sector.

Speaking in an interview with THISDAY, he noted that a situation whereby portfolio investors would want to take advantage of the monetary benefits of the insurance sector without adding value to the system was becoming a critical issue which the regulator would not lose sight of.

He was reacting to fears that some foreign insurance firms might only be interested in the profitability of the insurance sector after which they could exit the market at will without technical skills transfer or value addition to Nigerians.

To this effect, he said NAICOM would always insist that foreign investors show the value addition or technical skills programme, which they would bring to bear on the local market in order to ensure there are no major negative distortions to the market should they decide to exit.

He said: “It is a critical area for regulatory oversight and we are watching and we want to look at what you are bringing in. Some people will just come in and take advantage of the cash the insurance people have and just leave. But we have been controlling very tightly because we would ask you what are you bringing to the table.”

He also said the commission now had good reason to begin to look at its regulation from the international perspective given that some Nigerian companies practice insurance beyond the shores of the country.

On the supposed impact of the decline in oil price on the growth of insurance in the country, Onekhena said though the industry rely on other sectors to grow, the current fiscal challenges was unlikely to have significant negative impact on the sector.

He argued that the net impact of the current downturn would largely depend on the impact that would come from insurance clients, which may also be negatively affected by the oil price slide.

But he said the overall impact of the fiscal crisis on the insurance sector would be reduced through some of the positive regulatory initiatives being instituted by NAICOM.

He said: “If we say we have a wide gap to fill, and we take theses initiatives seriously, it could offset the impact of the oil price decline.

“You’ll find out that the industry is growing while the economy is down because a lot more people are coming to take insurance.”

 

[ThisDay]