'Govt Should Not Interfere in Pension Commission'
With the signing into law of the Pension Reform Act 2004, Mr. Godwin Alegieuno, the immediate past Chairman of Nigerian Insurers' Association (NIA) and Managing Director of Lion of Africa Insurance Company Limited says the law meets insurers' expectations but hopes that government would not interfere with the activities of the commission. He spoke with Nnamdi Duru
What would you say were your achievements in office as NIA Chairman?
The Chairmanship of NIA is a continuation of some other persons tenure as one normally operates as a Vice-chairman and then take over. So you carry on from where you have been working as the number two man to become the Chairman.
During my period, we were able to concretise and cement on the issue of discipline within the membership of the association which has commenced even before my tenure. We were able to make it much more serious by setting up an inspectorate unit that has the power to visit offices and check the books of companies to ensure that they comply with the ethics of the association.
The major area that we concentrated on was the area of rate-cutting which needed to be stemmed if the industry is not to go down the drain. We were able to successfully deal with that problem. It is still ongoing and we are following through to ensure that people don't slide back to old habits. So discipline and this rate-cutting issue was a major thing we were able to achieve.
We were able to review the banking industry in terms of fidelity guarantee and money-in-transit business which has become a very high risk business and even the banks are not paying adequate premium for the services we are rendering to them. So, we were able to bring that on and started addressing serious contentions of banks that were willing to pay adequate premium.
Also, we started the process of establishing a specialist company to deal with local risks in oil and gas business, marine hull, aviation, etc. for which as at now we don't have enough capacity. We felt that if insurance companies could set up a specialist company with adequate capitalisation to deal with that area, it will improve our combined fortunes, we have gone very far on that. And the general well-being of the secretariat staff, we attempted to improve the administrative set-up and things like that.
Did you meet the targets you set for yourself when you assumed office?
Of course, one cannot meet all the targets that were set. Like I said, it is not a corporate organisation where you say I have a target for the year or five years performance or so; because it is an association and you have two years and somebody is taking over from you, it is a moving target. When you come in, you look at what you have already started together with your predecessor, you add some new things to it and as you progress, you achieve some, some of them will still be pending by the time you were leaving office. But I would say essentially that most of the issues that were outstanding when I took over and the new ones that I brought in, up to 80 percent or more of these were completed.
What are the major challenges before the association as at the time you were leaving office and were you to be in office till today how would you tackle them?
The major challenge facing the industry is our ability to take insurance business within the context of the overall economy and that is not a challenge that can be dealt with by the Chairman of the association. It is an industry problem, it covers both ourselves, the brokers and everybody. That is the major challenge and I think all the various actions that we have been taking, individual actions, all boil down to achieving this particular goal.
I will say that it is a goal that is being achieved because it is not something that can be measured at any point in time but everybody knows that there has been an improvement on the issue of insurers and how we fit into the overall economy.
There were controversies over suspension of some member companies earlier in the year, what led to that and how was it resolved?
That is now history, I don't want to go back to that, I am not the Chairman anymore. We dealt with the issue and problems at that stage. We have resolved everything and they are all back to the fold. At a time, the problem was there and it has been resolved, everybody is happy now.
I am not referring to the rate crisis, I mean the recent suspension of some member companies?
Oh, suspension of member companies is a routine process, some member companies who may either have not paid their subscription, which is a major point that they have problems or have some areas that they have not been able to satisfy the association about. When such issues come up, we go to the association's constitution which says that companies will be suspended until they are able to meet with the expectations of the association they have not been able to solve some of the problems that we are not happy about.
Those companies that are suspended were suspended because either they have not paid their subscriptions or they have not met the association's expectations. If they are able to now meet up those expectations according to the constitution, they will be re-admitted.
The finances of the association went down while membership declined what accounted for this and what solutions would you proffer to this?
I don't know about decline in revenue but decline in membership, some companies were expelled and no new company is admitted because no new company was registered. So naturally the number will reduce and we are saying, that is the way we are going to enforce the association's principles. It doesn't matter if the number is reduced, we want quality membership. Any member companies that runs foul of our constitution and is appropriately disciplined will be suspended and if the expected time elapses and it has not made good its wrongs, it will be expelled. And once you are expelled from the association, the number will automatically reduce.
But in terms of the revenue and budget, I cannot recollect because I don't have the figures here to say why the revenue went down and the causes. Again, it could be because the membership has reduced and we have not increased the amount allotted to each member company between last year and this year.
What is your advice to your successor?
I can't advise him on the pages of the newspaper. He was my Vice-chairman, it is usually a team that is why it is easy to operate in NIA. Because succession is already planned at the Vice-chairmanship level and he is there working with the Chairman for two years and naturally the Chairman should be able to carry him along in whatever he is doing and the Vice-chairman should be able to assist and support the Chairman in whatever he is doing too. So it is a continuum.
Of course, when you become a Chairman, you have extra ideas and innovations you want to bring in to create better feelings. But for my Chairman, we have worked together for two years, he knows what to do. The issues that I will want to talk about he already knows.
The Pension Reform Act has been signed into law, did it meet the aspirations of the industry?
To a large extent.
In what areas?
The area of capitalisation, admitting life insurance companies to do pension business without having to re-register and to put in new capital.
The Pension Reform Act repealed the NSITF Act in spite of agitation against it by the private sector what problems and prospects do you think this poses?
I thought the Act allows Nigeria Social Insurance Trust Fund (NSITF) to carry on as a social insurance company for the next 10 years. I am not too sure because it will not operate as the original NSITF, it will now become a social insurance company and would now operate for the next 10 years before it can be liquidated but I can't say exactly what the provision is.
If it is repealed outrightly, that means it is supposed to be wound up then all the vested interests can make their proposals or their voices heard to the National Assembly.
The newly established National Pension Commission (NPC), do you think it will live up to expectation?
I will not comment on the that particular institution, I don't know the Director-General personally and I will not want to start assuming that he will or will not be able to work but I will comment on commissions generally in Nigeria.
When commissions are set up because government does not give them free hand to operate, their performances are usually not the best and I only hope that this particular commission will not go the way of the others where supervising Ministers will continue to interfere with the day to day administration and running of commissions. So I hope that this one will be autonomous and at least given broad targets for it to perform and it can be asessed as against those targets rather than government or the Minister trying to interfere with the operations of the commission.
The industry has recapitalised, how are insurers responding to the change in their finances?
I think until the end of the year when we see the accounts of the operators because companies don't tell you what they are doing on a monthly basis. You can only see it when their financial statements start coming out.
From next year, we will be able to assess how this recapitalisation has impacted on the entire industry and individual companies that constitute the industry.
NIA recently dragged NAICOM to court over the 1 percent capitalisation levy, don't you think NIA is chasing shadows or what are the justifications for its actions?
The case is already in court, I want to be careful, I don't want to be indicted for commenting on an issue that is subjudice.
Basically, it arose because NAICOM demanded for some levies for capitalisation, NIA felt that there was no law to back up that demand and NIA member companies had to pay because they were under the threat that they will not be listed as having met the capitalisation level if that payment was not made. They paid under protest and we are now asking the court to review it and tell us who is right and who is wrong.
At what level will Lion of Africa Insurance Company Limited play in the new pension system?
Well, my board has not decided yet but we will play definitely.
What are the contemporary issues facing NIA, Insurance companies and the industry as a whole?
To try and continue to improve the image of the industry and from there to price our products economically and make them better. A lot more cooperation among insurance companies in the area of creating wealth especially in oil and gas business which presently is highly untapped is necessary.
In the next one to five years, what level of contribution to the Gross Domestic Product do you thing the insurance sector will make?
The present contribution of insurance industry to the national GDP is definitely less than 1 percent. The present percentage we believe, we should be able to double if not triple in the next one to five years because if we are able to maximise the work that we are doing presently, optimise also in oil and gas business and the specialist company, we will be able to achieve this. There is a big drop in overall capacity and the income that we will generate from these areas of business will give us a major revenue.
Of course, the Pension Act will create a new opportunity for us in the group life business and annuity business too which is not a popular business in Nigeria now.
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