An insurance sector-specific, non-government organisation (NGO) Transparent Protection Ltd/Gte (TPL) has faulted the federal government’s inclusion of the National Insurance Commission (NAICOM) among the government-owned enterprises to remit 50 percent of internally generated revenue to the federation account.
A policy of compulsory 50 per cent deduction from the internally generated revenue of all government enterprises was introduced by the federal government under ongoing efforts to increase revenue and plug leakages in revenue collection.
TPL said the automatic revenue deduction policy is mistaken as it relates to NAICOM. Accordingly, it said the government should consider exempting NAICOM from the list, warning that it could seriously weaken NAICOM’s financial capacity making regulation and supervision of the insurance industry an uphill task.
“If otherwise should be the case, then, Nigeria must brace up for a new wave of insurer insolvency and eventual collapse of the sector, for weak and inadequate supervision,” the firm’s lead director, Dr Sam Chukwuka Onyeka told reporters yesterday in Abuja.
“The only way to avoid this might be to increase the amount of the statutory supervisory levy. Yet, this will surely be counter-productive, as the insurers will naturally push the difference into the premiums which they charge for insurance products, thus driving insurance products beyond the reach of Nigerians,” Onyeka stated.
He partly blamed the situation on the management of NAICOM to have stood by and watched, after they had the opportunity to make a case for the exemption of NAICOM from the policy.
Dr Onyeka said the commission ought to have long made a case for its removal from the schedule of the Fiscal Responsibility Act, 2007. Section 62 of the Finance Act 2020, which amended Section 22 of the FRA 2007, made room for exemption, through the minister of finance, and the National Assembly. “This, it failed to do.” TPL is confident that if NAICOM had requested for exemption through the Ministry of Finance, the situation would have been different.
TPL recommends joint industry engagement at this time, saying that if NAICOM cannot be fully exempted from the policy, then let the deduction be applied to its operating fund only.
The company called on the entire insurance industry as a body to make urgent representation to the minister of finance and coordinating minister of the economy, Mr Wale Edun for the exemption of NAICOM from the ongoing automatic revenue deduction policy.
If no exemption from the policy can be obtained, Onyeka said, then, let the policy be limited to NAICOM’s operating fund, while the education fund and the security and development fund of the insurance watchdog be spared. “This will guarantee a relatively well-supervised and healthy insurance sector in Nigeria,” he said.
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