The federal government has disclosed that it
will halt budgetary
allocations to the National Insurance Commission (NAICOM) as from next
year, admonishing the board and management to evolve innovative ways of
boosting its Internally Generated Revenue (IGR).
The government also regretted low insurance penetration in the
country, and called for a reversal to enable the insurance industry play
a more effective and prominent role in the economy.
Speaking at the inauguration of the newly-constituted 11-member board
of NAICOM in Abuja yesterday, Minister of State, Finance, Dr. Yerima
Ngama, described insurance as a very big business, advising the new
board to be firm and unyielding to any form of pressure in turning the
industry around.
Ngama noted that there were many insurance companies dotting the
nation’s landscape, urging the board to either liquidate those that are
weak or source for investors with the capacity to take over and turn
such companies around.
The minister noted that NAICOM was being strengthened with a new
regulatory framework to reposition the industry for a more pivotal role
in the economy.
He advised the board to emulate the development in the banking industry which currently has no distressed bank.
Ngama said a lot was expected from the board, assuring that the
federal government was strengthening the legal framework to make the
regulatory body more effective and responsive to the needs of the
economy.
He said with the law, “the regulator can bark and bite,” urging the board to help the government put the law in place.
Earlier, the Coordinating Minister for the Economy and Minister of
Finance, Dr. Ngozi Okonjo-Iweala, who inaugurated the board, regretted
that due to low financial capacity, the nation’s insurance industry had
yielded ground to offshore insurers.
She noted that the low capacity to cover high risk areas, including
aviation (airlines), shipping, oil and gas, among others, had led to
capital flight—a situation, she said, the government was desirous of
reversing.
Okonjo-Iweala stated that the insurance industry played an important
role in the capital market as well as the nation’s financial sector, and
reminded the 11-member board chaired by a former Deputy Speaker of the
House of Representatives, Mr. Chibudom Nwuche, that expectations from
them were “very substantial.”
She told the board that it was not meant to be a rubber stamp, adding, “we’re expecting results.”
Responding on behalf of the board, Nwuche promised that a careful
study of the industry would be undertaken, assuring that a visible
difference would be noticed in the industry soon.
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