By Bisi Bamishe
Former Commissioner for Insurance, Mr. Mohammed Kari, has expressed concern over the registration of NPF Insurance Company.
Kari expressed his concern in a letter written to the National Insurance Commission (NAICOM), titled, ‘Registration of the NPF Insurance Company-An objection’, dated July 25, 2024,
According to Kari, his objection was based on several critical concerns that he believed warrant serious consideration, therefore called upon NAICOM to make the decision that would uphold the best interests of the public and the integrity of the insurance industry, warning that registration of NPF Insurance spells doom for the risk bearing industry.
He stated in the letter that, “The core operations of the Nigeria Police Force are fundamentally at odds with commercial activities. The primary mandate of the Police is to maintain law and order, not to engage in business ventures. Allowing the Police to operate an insurance company could lead to conflicts of interest and distract from their essential duties. The Police is a regulator of sorts, they cannot be enforcing the law on compulsory insurance and be a provider of Insurance. The temptation to force motorist to insure with their company will be irresistible.
“The structure and ownership requirements stipulated by Nigerian insurance laws and Financial Reporting Council necessitate a level of expertise that is currently lacking within the nominated Board of Directors and the Police force.
Another requirement is a spread in ownership to avoid undue influence on the company by one shareholder. The authoritative nature of the police and their potential representation on the Board of Directors could lead to undue interference in the management of the insurance company, compromising its independence and effectiveness.
“The Nigeria Police Force Investments have a history of mismanagement, as evidenced by the numerous issues surrounding the Nigeria Police Pension Scheme. This history raises significant doubts about the ability of the Police to effectively manage an insurance company, which requires a high level of expertise and know-how.
“The fragmentation of the insurance business would result in the loss of valuable data and income for the industry. The entry of the Nigeria Police into the insurance market could disrupt the existing ecosystem, leading to inefficiencies and potential data loss that could harm the overall industry.
“In case they are floating the idea of a captive, I don’t believe the Nigeria Police Force has enough business spread or expertise to support the survival of a captive company neither do they have the reputation to attract independent business. This would expose public funds to unwarranted loss.
“The command-and-control nature of the Police force would make them take offence of a caution by a regulator. I don’t see how the Police can operate under someone’s regulation, for they would not accept commercial directive, and neither would they observe regulatory control. It would compromise the authority of the regulator if one company is seen to ignore regulatory control or out rightly disregard them, the regulator would lose his authority to regulate the market”.
He added, “Approving this application could set a concerning precedent. It may encourage other government agencies, such as the Federal Road Safety Corps, Nigeria Customs Service,Nigerian Army, Navy, Air Force, Nigeria Civil Defence Corps, Office of the Head of Service of the Federation and others, to seek similar licenses. (And why not?). The Commission can therefore not refuse them. This proliferation of government-run insurance companies could undermine the integrity and stability of the insurance sector and reverse the government policy of divesting from business, which as you remember was the reason of the creation of the Bureau for Public Enterprise (BPE).
Considering these concerns, Kari strongly urged NAICOM to reject the application for the registration of the Nigeria Police Insurance Company Limited. It is imperative to maintain the focus of the Police on their primary responsibilities and to ensure that the insurance sector remains managed by entities with the requisite expertise and independence.
In the letter, Kari copied the Honourable Minister of Finance; Chairman, National Insurance Commission; Chairman, Senate Committee on Banking, Insurance and Others Financial Institutions; Chairman, House Committee on Insurance and Actuarial Matters; Director General, Bureau for Public Enterprises; and Chairman, Nigerian Insurers Association.
