Omosehin and NAICOM Banana Peels

As Ayo Omosehin takes his seat as the new Commissioner for Insurance, industry observes have cautioned  him to beware of some banana peels and traps that slipped his predecessors  off their positions, writes Ebere Nwoji.

The new Commissioner for Insurance, Mr Olusegun  Ayo  Omosehin ,penultimate week officially assumed  duty as National Insurance Commission (NAICOM), Chief Executive Officer and  the federal government’s adviser on insurance matters.

The entire industry players and stakeholders welcomed him wholeheartedly with lots of expectations and hopes.

A sign of this is a  joyful reception given to him by the management and staff of the commission on his first day of resumption. He as als received a good number of courtesy visits by various stakeholders in the insurance industry with the Nigerian Insurers Association being at the vanguard of the visit.

On his part, Omosehin had during a short interactive session with management and staff of NAICOM asserted that the executive management and staff which is currently under his control would set a new tone for the insurance sector adding that the commission would definitely contribute its quota towards achieving the N1 trillion economy target of the federal government.

His official statement at his first resumption in office depicts  a sense of readiness to work and  ability to make positive changes in the commission during his tenure.

This is in line with the confidence and hope reposed on him by his professional colleagues shortly after his appointment.

Industry observers’ Warning

But while Omoshehin adjusts his seat to start work in his new office, industry observers have sounded a note of caution for him to beware of  some traps and banana peels inside and at the corridor of the commission that caused his predecessors to have slipped off and failed.

These peels are so slippery that despite the influence, management expertise, connections and achievements of some of his predecessors, they were removed from office while in extreme cases some were jailed and could not come out until their death.

Indeed, with the exception of Mr Fola Daniel who peacefully served his two tenures in office, no other commissioner was able to enjoy two tenures in office not withstanding their strength and connections.

For  instance, Chief Oladipo Bailey spent seven and half years as commissioner for insurance in NAICOM but was almost disgraced out of office. His tenure spanned from 1997 to 2004. His tenure was known for tearing down structural defects and setting up new structures in the commission.

His greatest achievement was safeguarding the insurance industry from bank predation and other hawks in the finance sector of the economy.

He successfully lobbied government to stop banks under the guise of universal banking from taking over insurance business convincing government that it would cause crisis in the economy. This  led to reversal of universal banking by the Central Bank of Nigeria (CBN) some years back. Bailey also supervised the upward review of the capital base of insurance firms as prescribed by the insurance Act of 1997 from N20 million to N50 million for life insurance, and N150 million for life special business and from N90 million to N350 million for composite firms.

Despite these achievements, Bailey, towards the end of his tenure faced charges of financial impropriety as he  was accused of inflating the cost of printing the new Vehicle Insurance Stickers (VISER).

According to his accusers, he awarded the contract for the printing of the stickers at N50 per unit as against the N39 demanded by the contractor. The action made the government to lose about N35 million. When the Commission’s Tenders’ Board discovered this, the government set up a committee to probe the insurance commissioner. He was said to have been found guilty and the committee recommended an outright sack. However, the president, apparently succumbing to pleas for mercy, converted the recommendation to a retirement.

Like Bailey, Like Chukwulozie

Chukwulozie took over from Bailey as commissioner for insurance between 2004 and  2007.

He supervised the last recapitalisation exercise in the industry which was adjudged very successful by all standards by stakeholders.  In 2007 his office  mandated reinsurance companies to raise their capital base from N350 million to N10 billion, while life and general insurers were asked to raise theirs from N150 million to N2 billion and N200 million to N3 billion respectively.

At the end of the exercise, the capital base of the entire industry was raised from a paltry N2 billion  to over N200 billion. The capacity of the industry to take on high ticket risks, meet claims obligations and train its workforce improved significantly at the end of the exercise.

Chukwulozie  worked tirelessly for the Local Content Policy in Oil and Gas business in conjunction with the Nigerian Content Development and Monitoring Board. This policy has become the backbone of many non-life insurers who are slowly growing their capacity to effectively participate in this juicy but very risky business year on year.

Chukwulozie also caused the separation of operation of insurance companies into life and non-life companies and insisted that the two lines of business which composite insurers used to merge be separated and accounted for separately. 

He insisted that operators interested in doing composite business must register separate life and general insurance companies, an exercise which ultimately exposed the huge pension and life insurance hole in the books of many composite insurers then. This directive generated bad blood for him by the affected operators who could not get him to reverse it and subsequently got his successor to reverse it as soon as he came into office.

Also during Chukwulozie’s tenure in office, many insurance companies got their shares listed on the floor of the Nigerian Stock Exchange (NSE) and for some weeks, insurance stock led trading on the floor of the exchange. 

Another major achievements of Chukwulozie was the partial autonomy which the regulatory body got during former President Olusegun Obasanjo’s administration in 2007. 

Despite these achievements,  his tenure ended in sad mood as he bagged 15 years imprisonment from an Abuja High Court over N10.4million fraud.

He was arraigned by the Independent Corrupt Practices and Other Related Offences Commission (ICPC), on a five-count charge for using private interest to furnish his official residence and demanding for a percentage in a contract he awarded. A statement by the then commission’s Head of Media and Events, Mr. Folu Olamiti, said the conviction was in 2007, with his wife, Angela, and a former Deputy Commissioner in charge of Finance and Administration, Adedolapo Ogungbe,  charged to court over  N10.4 million fraud.

In his rulling, the judge said:  “The ICPC has proved beyond reasonable doubt that a commissioner of NAICOM Chukwulozie, demanded fifty per cent of fees paid to liquidators of Gateway Insurance Plc. Beyond reasonable doubt is the standard of evidence required to validate a criminal conviction. Generally the prosecution bears the burden of proof and is required to prove their case.” The former commissioner died in the course of the matter.

After him, Fola Daniel was appointed Commissioner for Insurance in 2007, about two years after the removal of Chukwulozie from office. When he came into office, the technical capacity was below internationally accepted regulatory indices; with core technical staff capacity of less than 20 and 153 poorly trained auxiliary staff. This was further compounded by low staff morale owing to poor working condition/environment and poor remuneration.

Daniel during his first tenure tried successfully to address these issues. He laid off most of the dead woods in the commission and engaged qualified, experienced and vibrant workers to carry on the business of the commission nationwide. The regulator had series of court cases against the umbrella body of insurers in the country, Nigerian Insurers Association (NIA), and the brokers’ body, Nigerian Council of Registered Insurance Brokers (NCRIB). Daniel ensured that these were promptly settled and achieved harmony in the industry.

Determined to raise the contribution of the insurance industry to the nation’s Gross Domestic Product (GDP), Daniel introduced the Market Development & Restructuring Initiative (MDRI), a programme that sought to deepen insurance penetration in the country by enforcing five of the insurances made compulsory in the country. It collaborated with other regulators including the National Pension Commission (PenCom), National Health Insurance Scheme (NHIS) and other government agencies to ensure relevant stakeholders buy insurance.

Daniel also moved to shore up level of insurance awareness and education programme with a view to changing the mindset of Nigerians to accept insurance. He also ensured that insurance companies no longer repudiate good claims under any guise whether rates were cut or not.

After Daniel came Mohammed Kari whose regime  lasted for just one tenure and was shown the way out for Sunday Olorundare  Thomas who despite his achievements in his first tenure which left every one with no doubt that he would be appointed for second term, was made to step aside the same week he lost his wife to the cold hands of death.

Stakeholders’ View

Opinion sampling of industry practitioners on the performance of the commissioners and the fate of the present commissioner for insurance  shows that each has worked to uplift the industry but few left office honourably, pointing out the need for the present new commissioner to exercise caution in handling sensitive issues like the recapitalisation exercise which even the immediate past commissioners, including the dogged Sunday Thomas could not conclude.

This is because each time any commissioner raises the issue of capital upgrading,the operators whose firms are not sure of meeting the new capital sees it as removing their mouth from food and so fight vehemently against it.