Cynthia Ezekwe
The National Insurance Commission (NAICOM) has called on insurance institutions to ensure that their premium quotes and rates for insurance of government assets and liabilities are supported by appropriate data and other underwriting information. This requirement is part of an effort to ensure that insurance contracts are priced fairly and accurately, and that risks are properly assessed.
According to the guidelines released by NAICOM, insurance institutions are prohibited from imposing, quoting, offering, or paying any rates that are outside the range of rates that have been submitted to the commission in accordance with the market conduct guidelines. The commission made it clear that this requirement applies to all insurance contracts, including those for government assets and liabilities.
In addition, NAICOM noted that failure to comply with this requirement may result in penalties, including disciplinary action against the insurance institutions involved.
The insurance industry regulator stressed that it is illegal for insurance institutions to inflate premiums payable by ministries, departments, and agencies (MDAs) in respect of government assets and liabilities. The regulator also reminded insurance institutions of the importance of following the provisions of the market conduct & business practice guidelines, which set out rules and regulations governing the insurance industry.
NAICOM noted that it shall be illegal to solicit, offer, pay or receive any rebates or discount which is not recognised by extant insurance laws and regulations, adding that any insurance institution that fails/neglects to comply with any provision of the guidelines shall be penalised in accordance with extant insurance law and regulation.
According to NAICOM such penalty on non-performing operators could be extended to blacklisting the defaulters from handling government insurance and/or the suspension or withdrawal of their operating licences.
NAICOM also clarified that an MDA shall not pay premiums that are in excess of the actual premium on an insurance policy. Such a practice, which may involve the refund of excess premiums or the return of the excess in any form (cash or otherwise), is prohibited. If an MDA violates this regulation, it will be deemed to have contravened the regulations and may face sanctions.
