How autonomy eludes NAICOM amid success

The greatest achievement the National Insurance Commission (NAICOM) recorded from inception was the autonomy granted it by former President Olusegun Obasanjo. Though this success was acrimoniously surrendered to spite the former Commissioner for Insurance, Mr. Okechukwu Chukwulozie, who secured it during his tenure, the regulatory body has continued to fight to regain what it lost with­out success yet.

The actors

The insurance industry in Nigeria is yet to take its rightful place in the economy. As a re­sult, it has not been able to contribute meaning­fully to the Gross Domestic Product (GDP) of the country. Nigeria’s gross premium per capita of $8.9 is low when compared to $1,072, $29.9 and $49.3 for South Africa, Kenya and Ghana, respectively. Insurance penetration as a percent­age of GDP is 0.43 per cent and only an esti­mated 6 per cent of the population has any form of insurance.

Many stakeholders have traced the inability of the insurance industry to take its place in the economy to the lack of freedom on the part of the insurance regulator, NAICOM, to take de­cisions without recourse to the bureaucracies in the civil service.

Before 1992, the insurance industry was be­ing supervised by the National Insurance Super­visory Board. Initially, the industry was being supervised by the Insurance Department in the Federal Ministry of Trade, headed by the Reg­istrar of Insurance. And from inception, NAI­COM has been reporting to the Federal Ministry of Finance.

This is quite unlike other regulators in the country’s finance market, including the apex bank, Central Bank of Nigeria (CBN) and the 10 years old National Pension Commission (PenCom).

In recognition of this challenge, the four in­surance regulators-in-chief the country had have worked hard and recorded several positives in raising the stakes of the industry in the economy but the greatest among these was the won but lost autonomy for NAICOM.

A review of the tenures of the respective in­surance regulators-in-chief would give an in­sight into their respective focus and how they have been able to etch their names in gold in the industry and finance industry generally.


Chief Eugene Okwor, who was appointed as Registrar of Insurance, Federal Ministry of Trade, Lagos, in 1974 and later appointed Di­rector of Insurance in 1977 became the pioneer Commissioner for Insurance, National Insur­ance Supervisory Board (NISB), and the body which metamorphosed into the National Insur­ance Commission (NAICOM). He served in this capacity from 1993 to 1997 when he vol­untarily retired.

In this capacity, Okwor supervised the carv­ing out of the Insurance Department at the Federal Ministry of Finance and subsequently established NAICOM as the regulator for insur­ance industry.


The seven and half years tenure of Chief Ola­dipo Bailey was spent mostly tearing down bad structural defects and setting up new structures that formed the bedrock of what achievements the insurance industry has recorded in the last 10 years.

At different times, Bailey confronted recal­citrant operators, particularly the insurance bro­kers’ fraternity that held other operators hostage and would not want any interference from any regulator who wanted the situation changed.

The greatest achievement of Bailey was the protection of the insurance industry from preda­tion by banks and other hawks in the finance sector. He warned and lobbied government to stop banks, under the guise of universal bank­ing, from taking over insurance business, warn­ing that that would cause serious crisis in the economy.

Universal banking policy was introduced to enable financial institutions to provide all class­es of financial services under one platform, with the insurance industry as the target. His agitation has been rewarded with the reversal of universal banking by the central bank a few years back.

Bailey also supervised the upward review of the capital base of insurance companies as prescribed by the Insurance Act, 1997 from N20 million, N50 million for life and special risks business to N150 million, N200 million respectively. The capital base for composite and reinsurance companies were raised from N90 million to N350 million at the same time. This inadequacy in this capitalisation led to its up­ward review during the tenure of his successor.


Chukwulozie supervised the last recapi­talisation exercise in the industry, which was adjudged very successful by all standards by stakeholders when in 1997, the Federal Govern­ment 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 industry was raised from a paltry N2 billion or thereabout 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 this exercise.

The embattled former Commissioner for In­surance 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 business which composite insurers used to be merged be separated and accounted for sepa­rately. He insisted 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, 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. It is unfortunate that most insurance stocks that rose to between N3 and N6 per share during his tenure have re­mained flat at 50 kobo per share in the last five years while investors have continued to shy away from them over the years.

One of the major achievements of Chukwu­lozie was the autonomy, which the regulatory body got during former President Olusegun Obasanjo’s administration in 2007. With this, the regulatory body did not have to report to the Ministry of Finance with the bottleneck and in­herent challenges but report directly to the Presi­dency just like the CBN.

This achievement was unfortunately sacri­ficed on the altar of acrimony by his successors, who were bent on rubbishing all the good things he achieved in office. This same autonomy, which Chukwulozie secured for NAICOM but sacrificed by his persecutors is what the current administration in the commission has been pur­suing in the last two years without any success.


Mr. 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 attended to and achieved harmony in the industry.

Determined to raise the contribution of the insurance industry to the nation’s GDP, Daniel introduced the Market Development and Re­structuring Initiative (MDRI), a programme that sought to deepen insurance penetration in the country by enforcing five of the insurance prod­ucts made compulsory by various statutes in the country. It collaborated with other regulators including 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.

The commission under him strengthened customers’ complaint platform and a platform for the smooth resolution of the differences be­tween the different segments of the industry.

Meanwhile, in the last two years, the com­mission under Daniel has been fighting to regain the autonomy, which was thrown back at gov­ernment as soon as Chukwulozie was shown the way out.


An insurance watcher who rated the achieve­ments of the last three Commissioners of Insur­ance in the country on condition of anonymity said, “the previous Commissioners, Bailey and Chukwulozie, did not complete their tenures, and much as I wish Daniel’s own will be differ­ent, it is most unlikely to be.

“While all three have had circulars forward­ed to Ministries, Departments and Agencies (MDAs) from the Office of the Secretary to the Government of the Federation instructing them to insure all their assets, only Chukwulozie adopted an approach of visiting Ministers and Heads of Parastatals to discuss the essence of insurance as conveyed in the circular.

“There seems not to be any proactive steps taken now and then to engage and enlighten Heads of MDAs. Is it a good time for a semi­nar for all Heads of Insurance and Officers in charge of insurance in the MDAs? Someone has got the idea right,” he said.

Unfortunately, Chukwulozie who was ad­judged to have achieved much for the industry under his watch is now serving time for some frivolous charges stemming from disagree­ments he had with some stakeholders when he was in office.

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