NAICOM Releases New Guideline On Premium Collection, Remittance

The National Insurance Commission (NAICOM) has released new guideline on premium collection and remittance.

A statement issued by NAICOM in Lagos recently said that the new guideline would take effect from January 1, 2013.

The statement quoted Mr Fola Daniel, the Commissioner for Insurance, as saying that henceforth only insurance policies for which payment had been received would be recognised.

It said that the new guideline was to protect the interest of policy holders and other stakeholders from the existing practice.

“Insurance companies have continued to report huge amount of outstanding premiums, while making large amount of provisions for bad debts without the recovery of the debts thereafter,” it said.

NAICOM directed that insurance companies would pay N500, 000 penalty for each cover granted without advance premium, while brokers would pay N250, 000 for failure to notify of premium received within 48 hours.

It said that the operating licence of an insurance company that flouted the new rule might be suspended by the commission.

According to the guideline, a lead insurer should remit premium collected to other co-insurers within 30 days of receiving such premium.

It said that all insurance companies should notify NAICOM within 30 days from the end of every quarter of premiums admitted.

“Any insurance company or broker who failed to render this shall be liable to a penalty of N5, 000 each day of the default,” NAICOM said.

It added that the evidence of remittances to reinsurers should be a condition for determining admissibility of the reinsurance debts in the insurance company’s financial statement.

The guideline directed that premium for all local placements should be paid within 14 days of receipt of such premium from brokers or insurance companies.

It directed that insurance companies and brokers were required to carry out reconciliation of their accounts by March 31, 2013.

It said that any penalty imposed on any company should be disclosed in the company’s annual financial statement and reported to shareholders during its annual general meeting.