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NAICOM Unveils Strategic Plan for Insurance Reform

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insurance brokers and loss adjusters

By Adedapo Adesanya

The National Insurance Commission (NAICOM) has rolled out its three-year strategic reform (2021-2023) that will see the transformation of the insurance sector.

The commission said the starting point of the reform was to return operating firms to liquidity status by ensuring that they restructure their balance sheets so that those that currently rely on assets that they can hardly turn to cash would effect a major turnaround in their operations and run their business based on cash flow instead of fixed assets.

According to the commission, it has already started this through expert advice on owners of various insurance firms in order not to repeat or face some challenges it had in the past.

For instance, it noted that firms exceeded the maximum level of investment in real estate and are now facing a cash crunch and could not easily turn their assets to cash to keep afloat in business.

It further said it is strictly guiding operators to ensure that going forward none exceeds the 25 per cent maximum investment in the real estate sector.

Making the disclosure recently, NAICOM’s Director of Supervision, Mr Thompson Barineka, who was speaking on behalf of the Commissioner for Insurance, Mr Sunday Thompson, said that most of the firms currently regarded as weak were considered so because they could not quickly turn those assets into cash and continue to discharge their responsibilities to the public.

Mr Thomas said this being the case, the agency, having accomplished the five-year strategic plans it had set for itself, is now embarking on a three-year reform.

This new reform is aimed at positioning the commission as a globally competitive regulator whose functions are compliant with global best practices and whose supervisory roles support strong insurance institutions that can stand the risks of other economic operators and meet the prevailing needs of the insuring public.

The reforms, according to Mr Thomas, rest on five strong pillars namely: entrenching effective and efficient service delivery; ensuring safe, sound and stable insurance sector; adequately protecting policyholders and public interest; improving trust and confidence in the insurance sector; encouraging innovation, and promotion of insurance market development.

According to him, the reform also gears towards ensuring absolute trust on the commission through its promotion of insurance market development tailored towards improving the scope of internal rule-base to a new risk-based supervision approach using its new integrated governance management system.

He further noted that some unexpected occurrences necessitated the need of the reforms, considering the fact that since the development of the last strategic plan which lasted between 2016 – 2020, there have been various events such as the COVID-19 pandemic, the #EndSARS protests, and the rise in kidnappings, armed banditry, communal tensions and conflicts, which have impacted on the activities and initiatives of the commission.

According to him, these events have ushered in the new normal hence shaping how the industry conducts its business going forward and the corresponding regulatory response.

He said this has also created the need to prepare the workforce for the new work order, protection of policyholders, improving human capital, leveraging on technology and creating alternative channels of insurance distribution to stimulate productivity.

He further said NAICOM would also ensure periodic review and performance monitoring of the plan within its life span bearing in mind the pandemic.

He noted that within the first year of his administration, stability has been achieved within the commission and the entire industry with staff welfare at the front burner.

He also noted that his administration has been able to issue licenses to five insurance firms in the category of three life insurance, one general insurance and one reinsurance operator.

Mr Thomas said before his tenure, the last reinsurance firm licensed in the country was 32 years ago while the last insurance firm was licensed 10 years ago.

The NAICOM boss said in line with the three-year strategic reforms, his administration saw the need to bring in new life insurance operators because, in today’s economy, one area driving the flow of funds to the industry is life business.

“Why South Africa is dominating insurance market in Africa is because of its strength in the life insurance business.

“Today in Nigeria, the contributory pension asset is in the neighbourhood of over N12 trillion, it is expected that some of these funds will find their ways to the insurance sector but at present, insurers are still scratching business on the surface,” he added

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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Economy

NASD OTC Market Remains in Bearish Territory With 0.01% Loss

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Nigeria's Unlisted Securities Market Sheds 0.78%, NASD Shares up 8.31%

By Adedapo Adesanya

The NASD Over-the-counter (OTC) Securities Exchange recorded a 0.01 per cent fall on Friday, September 23, as it dropped for the fourth straight day. This further dampened investors’ confidence.

In the session, the bourse, which admits unlisted securities, recorded the decline following a loss recorded by Food Concepts Plc as the company saw its equity value drop 1 Kobo or 1.1 per cent to sell at 90 Kobo per unit versus the previous day’s 91 Kobo per unit.

As a result, the market capitalisation of the NASD OTC exchange went south by N60 million to close at N952.51 billion compared with Thursday’s N952.57 billion.

Also, the NASD Unlisted Securities Index (NSI) dropped 0.05 points to finish at 723.56 points, in contrast to the preceding session’s 723.61 points.

Friday’s market data revealed that there was a slump in the units of securities exchanged by investors by 4.4 per cent to 60,420 units from the 63,219 units traded a day earlier.

The value of securities traded amounted to N57,125.00, 99.3 per cent lower than the N8.4 million achieved a day earlier, while the number of deals carried out during the session went down by 28.57 per cent to five deals from the seven deals carried out on Thursday.

AG Mortgage Bank Plc finished the session as the most traded stock by volume on a year-to-date basis with the sale of 2.3 billion units worth N1.2 billion, Central Securities Clearing Systems (CSCS) Plc also retained the second spot with the sale of 687.6 million units valued at N14.3 billion, while Mixta Real Estate Plc was in third place for trading 178.1 million units valued at N313.4 million.

Also, CSCS Plc maintained its position as the most active stock by value on a year-to-date basis with a turnover of 687.6 million units valued at N14.3 billion, VFD Group Plc was in second place with 27.7 million units worth N7.4 billion, while FrieslandCampina WAMCO Nigeria Plc retained the third place with the sale of 14.3 million units valued at N1.7 billion.

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Economy

Naira Crashes to N720/$1 at Black Market, N738/$1 at P2P, Trades N436.33/$1 at I&E

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forex Black Market

By Adedapo Adesanya

The exchange rate of the Naira to the United States Dollar moved in different directions on Friday, depreciating in the black market and the Peer-to-Peer (P2P) segments of the foreign exchange market and gaining in the Investors and Exporters (I&E) window.

In the P2P category, the local currency declined by N13 against the greenback to sell at N738/$1 compared with the preceding session’s N725/$1, and in the black market, it lost N7 to trade at N720/$1 in contrast to Thursday’s value of N713/$1.

However, in the spot market, the domestic currency appreciated against the American currency by 17 Kobo or 0.04 per cent to close at N436.33/$1 in contrast to the previous day’s N436.50/$1.

Data from the FMDQ Securities Exchange indicated that the turnover for the session increased slightly by $4.37 million or 4.3 per cent to $106.11 million from $101.74 million.

In the interbank segment, the value of the Naira to the Pound Sterling remained unchanged at N487.99/£1 and against the Euro, the local currency also traded flat at N425.66/€1.

In the digital currency market, it was a mixture of ups, downs and flats, with Dogecoin (DOGE) recording an 8.1 per cent rise to trade at $0.0657.

Solana (SOL) appreciated by 6.9 per cent to $34.16, Litecoin (LTC) went up by 4.0 per cent to trade at $54.92, Binance Coin (BNB) recorded a 2.9 per cent rise to sell at $281.86 while Ethereum (ETH) saw its value go up by 1.4 per cent to sell at $1,326.76.

On the other hand, Ripple (XRP) recorded a loss of 1.8 per cent to quote at $0.4939, Bitcoin (BTC) slid by 0.2 per cent to $19,035.94, Cardano (ADA) recorded a 0.1 per cent slide to trade at $0.4599, while the US Dollar Tether (USDT) and Binance USD (BUSD) closed flat at $1.00, respectively.

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Economy

Equity Market Sheds 0.33% as Investors Sell off BUA Cement, 21 Others

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equity market size

By Dipo Olowookere

Twenty-two stocks ended on the losers’ chart on Friday at the Nigerian Exchange (NGX) Limited, outweighing the 11 equities that finished on the gainers’ log.

The weak investor sentiment further plunged the market into the danger zone by 0.33 per cent at the close of transactions, data from the exchange indicated.

It was observed that the equity market has remained bearish despite the recent gains in banking shares. The sustained sell-offs in the industrial goods space have continued to put the bourse under pressure.

The industrial goods sector depreciated yesterday by 1.61 per cent, the insurance counter lost 0.46 per cent, the energy index declined by 0.46 per cent, while the banking and consumer goods sectors appreciated by 0.85 per cent and 0.10 per cent, respectively.

The All-Share Index (ASI) decreased at the close of business by 163.72 points to 49,026.62 points from 49,190.34 points as the market capitalisation went down by N88 billion to N26.445 trillion from N26.533 trillion.

A total of 169.2 million stocks worth N3.2 billion were transacted on Friday in 3,206 deals compared with the 126.8 million stocks worth N1.8 billion traded in 3,117 deals on Thursday, indicating an improvement in the trading volume, value and number of deals by 33.38 per cent, 79.16 per cent and 2.86 per cent, respectively.

Courteville ended the day as the busiest stock after it transacted 27.7 million units valued at N12.5 million, NGX Group traded 24.5 million units worth N417.4 million, Zenith Bank transacted 20.8 million units worth N416.8 million, Transcorp exchanged 11.2 million units valued at N11.6 million, while Jaiz Bank sold 10.9 million units for N8.7 million.

The worst-performing stock was CWG as its value depleted by 10.00 per cent to 81 Kobo, Berger Paints lost 9.85 per cent to N5.95, Eterna went down by 9.45 per cent to N5.75, Sunu Assurances declined by 8.57 per cent to 32 Kobo, while Chams dropped 6.90 per cent to 27 Kobo.

The best-performing stock yesterday was Vitafoam, which grew by 6.90 per cent to N22.45, followed by RT Briscoe, which appreciated by 6.06 per cent to 35 Kobo. Access Holdings improved by 6.02 per cent to N8.80, Cornerstone Insurance expanded by 3.70 per cent to 56 Kobo, while Fidelity Bank rose by 3.00 per cent to N3.78.

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