A former Commissioner for Insurance and Chief Executive of the National Insurance Commission (NAICOM), Mr Mohammed Kari, has written to the Commission, kicking against the registration of NPF Insurance Company Limited.
Mr. Kari based his objection on the premise that the core operations of the Nigeria Police Force are fundamentally at odds with commercial activities, stressing that the primary mandate of the police is to maintain law and order, not to engage in business ventures.
He stated that 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 enforce the law on compulsory insurance and be a provider of insurance. The temptation to force motorists to insure with their company will be irresistible,” Mr Kari highlighted.
He added that the structure and ownership requirements stipulated by Nigerian insurance laws and the Financial Reporting Council necessitate a level of expertise that is currently lacking within the nominated board of directors and the police force.
Mr. Kari noted that another requirement is a spread in ownership to avoid undue influence on the company by one shareholder.
He said, “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.”
He pointed out that the fragmentation of the insurance business would result in the loss of valuable data and income for the industry, and 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.
The ex-NAICOM boss noted that “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, nor do they have the reputation to attract independent business. This would expose public funds to unwarranted loss.”.
Mr Kari further stated that “the command-and-control nature of the police force would make them take offence of caution by a regulator. I don’t see how the police can operate under someone’s regulation, for they would not accept commercial directives, and neither would they observe regulatory control. It would compromise the authority of the regulator if one company was seen to ignore regulatory control or, outright, disregard them. The regulator would lose its authority to regulate the market.
“When I was an operator and their insurer, the NPF, as a consumer, had detained a head of department and I, the CEO, when we refused to pay for a loss that was not insured on their policy. Can the CEO of an NPF insurance company refuse to pay any demand of his owners, whether insured or not?
“When I was a regulator, the NPF, as a consumer, has requested on many occasions to obtain waivers to bypass the Nigerian Insurance Industry to place their businesses directly abroad, and on all occasions, we have refused them. (These requests were made against the advice of their Broker and insurer.) I can just imagine what they would do as a registered Insurance Company”.
Mr. Kari stressed that “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 licences. (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 for the creation of the Bureau for Public Enterprise (BPE). I suggest you seek
the opinion of the Bureau as you continue with your consideration”.
Considering these concerns, he strongly urged the National Insurance Commission to reject the application for the registration of the Nigeria Police Insurance Company Limited, as 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.