Nigeria: Stakeholders Praise NAICOM’s Efforts in Managing Ailing Insurance Companies

Several stakeholders in the insurance sector have commended the National Insurance Commission (NAICOM) for its proactive management of struggling firms within the industry.

These stakeholders acknowledged the recent disclosure by the Commissioner for Insurance, Olusegun Omosehin, regarding the state of some insurance companies. They noted that his transparency is a commendable step towards encouraging industry players to take necessary corrective actions.

During an interactive session with journalists in Lagos last Wednesday, Omosehin revealed that NAICOM is actively managing several ailing insurance firms to prevent them from failing their customers. He stated, “Many of you have reported cases where consumers have struggled to get their claims paid by certain entities. These are some of the issues we are addressing. We have a few ailing companies that we are managing to avoid disappointing the public. While this is part of our responsibility, our goal is to reduce the frequency of such incidents and ensure that fewer companies fall into this category. This involves extensive work, which we are currently undertaking. However, the reality is that we have a few companies under our management, and we are working hard to turn things around.”

Omosehin also issued a stern warning to those responsible for the mismanagement of insurance firms, emphasizing that they would be held accountable and required to revive the companies they have mismanaged. He stressed that NAICOM’s focus is not on shutting down companies but on ensuring their revival to protect policyholders.

Dr. Olufemi Abass, an Associate Professor of Insurance at Lagos State University, lauded the Commissioner for his boldness in acknowledging the existence of struggling firms in the industry. He said, “I commend the CFI for openly stating that some insurance companies are ailing. Even without his statement, it’s clear to industry stakeholders that there are issues. The fact that he didn’t mention any names suggests that this is more of a wake-up call for these companies to address their challenges. I don’t believe there’s any cause for panic; these firms may still meet their obligations, albeit not as promptly as they should. This is a signal for them to address the issues affecting their performance.”

Moses Igbrude, National Coordinator of the Independent Shareholders Association of Nigeria, also praised NAICOM’s approach to managing troubled insurance companies, describing it as the best strategy for protecting policyholders, investors, and employees. He noted, “The strategy NAICOM has adopted, as affirmed by the Commissioner of Insurance, is the best approach for everyone involved—consumers, investors, and staff. Companies don’t fail on their own; it’s the managers who run them down. When a company fails, it impacts many stakeholders. NAICOM’s intervention helps ensure that policyholders get their claims, staff retain their jobs, and investors recover their investments when these companies are eventually sold to core investors.”

However, not all feedback was positive. Adedayo Adeleke, a minority investor, expressed concern that the Commission’s comments might cast an unnecessary shadow over the entire industry. He argued that by not naming specific companies, the CFI’s remarks could create uncertainty about the health of the sector as a whole. Adeleke said, “The investing public has limited insight into the internal workings of insurance companies, so they rely heavily on the regulator’s statements. By making a broad statement without naming specific companies, the CFI has cast doubt on the entire industry, which could be harmful. It would have been better to specify which subsectors—general, life, or composite—are affected.”

Another minority investor, Nornah Awoh, criticized the exclusion of minority shareholders from the process of managing struggling companies. He pointed out that minority shareholders often have no role in the management of these companies before they encounter difficulties, yet they are not included in the recovery process. Awoh stated, “Minority shareholders are usually not involved in the mismanagement of these companies, yet when it comes to managing their recovery, they are left out. This is unfair, as minority investors also have a stake in the business and should have a say in how it is run.”

These diverse perspectives highlight the complexities involved in managing ailing insurance firms and the need for transparent, inclusive, and effective strategies to safeguard the interests of all stakeholders in the industry.