Kari Faults Insurance Companies On Non-payment Of Dividends

By Loveth Azodo, Lagos

The Commissioner for Insurance, Mohammed Kari, has frowned at non-payment of dividends by Insurance firms, which results in erosion of interest of Investors in the sector.

 Kari, who made the condemnation of non-payment of dividends by most insurance companies at the members’ meeting held in Lagos, said that such practice amounted to acts of disincentive towards investing in insurance sector.

 He cited that only about six out of 27 publicly quoted insurance companies paid dividends in the last three years.

He said: “Amongst the 27 publicly quoted insurance firm in the stock exchange, Only about 6 to 7 insurance firm has paid dividends in the last 3 years and definitely there are no attraction of investors if you don’t pay dividends.”

Reiterating the conclusions drawn at the retreat recently held at Abeokuta, Kari said “there is need for consolidation on all insurance firms in their director level, companies have gone so weak, we have companies that cannot pay salaries we also have companies that cannot pay claims”

He assured that when the road map repositioning of insurance firms is concluded,  the Commission would come out with some directives of policies on how an underwriting will be consolidated.

Also, Thompson Barineke, the NAICOM Director of Supervision, who spoke on the role of brokers in enabling soundness profitability and optimal capitalization of the Insurance institution,  pointed out that the profit after tax and return on asset of the insurance companies over the past four years was agreeably rated by the brokers as not good:

 He cited the yearly profit after tax this: 2014, 19.29 billion; 2015,  21 billion; 2017, 37 billion; and Return on assets: 2014, 2.6 Kobo; 2015, 2.5 Kobo and 2016, 4 Kobo.

Barineke while proffering solutions to the poor figures, advised the brokers to consider the risks arising on micro economy environment on the insured, insurers and other stakeholders like exchange rates while insuring assets as it affects the profitability of the industry.

 He said: “Underpricing is one of the number one devil of the industry, the insurer must charge adequate premium rate as it affects financial income.

“Huge unpaid claim is a huge dent on the image of the industry, brokers should compile a list of claims that have overstayed dew period. Avoid money laundering, avoid laundering premiums, Avoid laundering our commission.”

He further noted that some brokers encourage some insurance companies to book and hold, and adviced the brokers to refrain from all these as it affects the soundness profitability and optimal capitalization of the Insurance institution.

Also speaking, Leonard Akah, NAICOM Director of Authorisation and Policy Inspectorate, frowned at the issue of late renewal of license.

He said: “You are aware that your license is for one year, you have 90 days grace period, some renew their paper even before it expires you didn’t lose anything, it is to your own advantage”

Addressing the issue of absentee CEOs during renewal papers he said: “We shouldn’t allow our certificates to be used, it’s either you are there or not there, if there are serious issues you are the person we know, we won’t process your papers when we see that over time someone is signing for the CEO.”

While making reference to the presentation, Kari added that Leonard’s presentation may not to be necessary if the brokers can be the professionals they ought to be.

Tope Smart, MD/CEO of NEM Insurance plc the Sponsors of the Event quoted a market share of 5.7 percent in 2016 and are aspiring to have nine percent market share by 2020. He added that the company has made 10 year dividend payout to her stakeholders.