Appraisal of the Role of Regulatory Bodies in the Nigerian Insurance Industry

Appraisal of the Role of Regulatory Bodies in the Nigerian Insurance Industry

Abstract of Appraisal of the Role of Regulatory Bodies in the Nigerian Insurance Industry

Business is too important to be left to “Business-men” to run and operate as they see fit. Moreso, if that “business” is that of insurance. The average Nigerian might not know much about insurance but he or she knows that insurance companies “don’t pay claims”
In otherwords, the insurance industry has a bad image. This was the reason behind the federal governments creation of different insurance regulatory bodies. To prevent “quacks from doing insurance business and to protect the insuring public, insurance laws and regulatory bodies have been created to further protect the insuring public.
The question now is, who are these regulatory bodies? How do they operate and how effective are they in performing their duties? This project in addition to “appraising” these regulatory bodies, will trace the genesis of regulating insurance business and finally, make recommendations on how the regulatory bodies can do better.

Chapter One of Appraisal of the Role of Regulatory Bodies in the Nigerian Insurance Industry

INTRODUCTION

BACKGROUND OF STUDY 

The business of insurance is based on the concept of spreading a risk, so that “it lies easily upon the many than heavily upon the few. Insurance is a pool of funds into which contributions are made and from which those who suffer loss are compensated.
As a contract, the insured and the insurer must be honest in all their dealings with each other. On the part of the insurer, he must be able, financially to settle all legitimate claims made on him as and when due. In the past, almost anyone, with or without experience and adequate capital could own an insurance company. As a result, most legitimate claims were not paid. This sad state of affairs was due largely to the “freedom” or rather, the absence of adequate Government supervision.
In other to stop this exploitation, the Government set up the “J.C. Obande” commission in 1961. Their report led to the 1961 insurance companies act, more decrees and acts followed leading to the present insurance Act of 2003.
In addition, from 1961 to date, the following regulatory bodies supervise the insurance industry they include; the Central Bank of Nigeria (C.B.N), the National Deposit Insurance Commission (N.D.I.C), the Securities & Exchange Commission (SEC) and finally the National Insurance Commission (NAICOM) which plays a more direct role in the supervision of insurers. Each of these bodies performs functions aimed at regulating the insurance industry. An assessment of their performance will be made.