The Commissioner for Insurance, Alhaji Mohammed kari, has warned insurance consumers and operators against placing their risks abroad when the local capacity in the country has not yet been exhausted.
He said this during the first interactive session with major consumers of insurance products and services in Lagos.
Kari said that the commission in recent time had noticed certain actions of consumers that were detrimental and dangerous to the insurance industry in Nigeria.
“We have seen situations where the insured in connivance with insurance brokers allot proportion of risk to local underwriters without due cognisance of the insurers’ capacity; preferring to place risk abroad even when the local market is not saturated,” he said.
He also observed that some consumers in alliance with intermediaries chose to exclude some underwriters from participation in underwriting certain risks without tenable justification.
Kari urged such consumers to desist from the practices as they ran counter to Nigeria’s regulations.
Where the commission noticed such practices, he said it had rejected applications from operators for approval.
While the commission was not averse to ceding of risk offshore, Kari said it must be done only when the local market had taken what its capacity would allow.
Other areas where the commission has issues with the insurance consumers, according to him, are delay in submitting evaluation results of bidding processes to NAICOM; delay by the insured in issuing placement/renewal instruction to the insurer, which more often than not, makes it impossible for the insurer to meet the application period for the placement of excess risks offshore where applicable; and the emerging practice of supposed premium funding by local brokers on behalf of the insured.
He said these were trends not only dangerous to the insurance industry but also to the consumer.
“We also crave the understanding and cooperation of the consumers to ensure compliance with our laws and regulations, particularly the Insurance Act 2003 and the Local Content Act,” he said.