The National Insurance Commission, NAICOM, has faulted insurance companies and brokers for lack of seriousness in the collection of premiums, and in some extreme cases, outright write off of outstanding premiums.
In a circular addressed to all the Managing Directors of insurance brokerage companies and signed by Mr. Nicholas Opara, head of NAICOM’s Supervision Department, the companies concerned were informed that as stipulated by the International Financial Reporting Standards, IFRS, and in conformity with the Prudential Guidelines of the commission, insurance companies and brokers were required to impair vast amounts of premiums outstanding in their books.
The commission stated further that rather than act in line with extant provisions that most insurance companies had misunderstood the notion of impairment and went ahead to either completely write off or relax all efforts to collect the outstanding debts. The industry regulatory institution rued the unprofessional practices of insurance companies and brokers in this regard, noting that the infringement has caused serious erosion in the shareholders’ investments . NAICOM also pointed out it was concerned about lack of seriousness in the collection and in some extreme cases, outright write-off of outstanding premiums by insurance companies and Brokers. However, in order to address the infringement, the commission directed all insurance companies to furnish it with a comprehensive schedule of premiums receivable (gross) reported in their clients’ account as at 31st December, 2012.
According to the commission, the comprehensible schedule of premium receivable should show the date of the transaction, policy number, name of the debtor, amount involved and the status of the debt as at 31st December, 2015. Similarly, the insurance companies were directed to forward to the commission, a comprehensive Schedule of Premiums receivable (gross) from transactions between 1st January 2013 and 31st December 2015 indicating for each item the date of transaction, policy number, name of the debtor, amount involved and the status of the debt as at 31st December, 2015.
Also to be forwarded to the commission is a comprehensive schedule of outstanding premiums written-off as uncollectible between 1st January 2013 to 31st December, 2015, showing for each item, the date of transaction, policy number, name of the debtor, amount involved as well as stating the reason for the write-off and evidence of Board Approval for the action. The circular warned that insurance companies and brokers concerned should ensure that all the necessary information and documents that are needed to resolve the issue conveyed by the circular are made available to the Commission on or before this Friday.
Source: National Mirrow