The National Insurance Commission has said it will sanction insurance practitioners who fail, neglect or refuse to consider and fully utilise relevant in-country capacities of insurance/reinsurance institutions such as pools and reinsurers before applying for approval to cede certain proportion of risks offshore.
According to a circular signed by the Director, Authorisation and Policy, NAICOM, Mr. Pius Agboola, the commission also observed that some insurance institutions have inappropriately arrogated to themselves the authority to unilaterally exclude some insurers over alleged outstanding claims.
It said, “In some situations where the pools, insurers or reinsurers are offered participation, the institutions are either offered minimal proportion below their capacity or informally restricted and/or compelled to accept lower than their respective capacities for the purpose of justifying cession of the risks offshore.
“This unethical practice, which undermines our collective resolve to ensure full utilisation of available in-country capacity in line with domestication and the local content policy, contravenes extant insurance laws and regulations and shall therefore not be tolerated henceforth.
The commission noted that all insurance institutions were required to ensure that Nigerian insurers, reinsurers and pools (in the commission’s records) must be offered and allowed to willingly decide the proportion of the risk they would accept (subject to their respective capacities) before any application for approval for offshore placement of the excess.
It added that all recognised reinsurance treaties/arrangements and additional capacities offered by local reinsurers/pools must be fully utilised before excess consideration for offshore placements.
The commission said all off-the-system or informal directives to coinsurers, local reinsurers and pools to accept lower than their desired available capacities are hereby prohibited.