2013年-IMF国际货币组织全球_Nigeria_Publication_of_Financial_Sector_Assessment_Program_Documentation––Detailed_Assessment_of_Observance_of_Insurance_Core_Principles_65页_1mb

Summary of the Detailed Assessment of Observance of Insurance Core Principles in Nigeria (May 2013)

Core Content

This document presents a detailed assessment of the observance of Insurance Core Principles (ICPs) in Nigeria's insurance sector, conducted by the International Monetary Fund (IMF) and the World Bank. The assessment was based on available information as of May 2013 and outlines key findings, recommendations, and the current regulatory and supervisory environment in Nigeria.

Main Findings

• Regulatory Framework: Insurance activity in Nigeria is regulated by the Insurance Act, No. 1 of 2003 and supervised by the National Insurance Commission (NAICOM), established under the National Insurance Commission Decree, No. 1 of 1997.
• Insurance Sector Development: The insurance sector is underdeveloped, with assets less than 2% of GDP. Life insurance assets are about half of non-life assets, indicating low savings and investment insurance product utilization.
• Premium Growth: The total gross written premium in the insurance sector grew at an average rate of 23% from 2001 to 2010, but remains small, with total premium income of approximately 201 billion Naira in 2010, representing 0.7% of GDP.
• Market Consolidation: The sector saw a significant reduction in the number of insurers, from 104 in 2007 to 60 in 2008, due to increased minimum capital requirements. Further consolidation is expected due to banking regulations requiring banks to divest non-banking activities by April 2012.
• Market Structure: Non-life insurance is more developed than life insurance. The non-life sector is about three times larger than the life sector. The top two non-life insurers have market shares of over 5%, with the top 10 accounting for 50% of the market.
• Insurance Penetration: Insurance penetration in Nigeria is very low. Non-life insurance penetration is 0.51% in 2010, only one-seventh of the OECD average. Life insurance penetration is even lower at 0.2%.
• Investment Portfolio: Insurers invest in short-term money market and bank deposits (30%), stock and private debentures (30%), and real estate, loans, and government paper (40%). The need for liquid assets reflects the short-term nature of liabilities.
• Foreign Ownership: Foreign ownership is limited to 40%, but some insurers exceed this limit. Examples include Old Mutual Insurance Company (70% South African ownership) and ADIC Insurance (96.15% Cote d'Ivoire ownership).
• Government Ownership: Government ownership has decreased, but it still holds 100% of the Nigerian Agricultural Insurance Corporation.
• Solvency and Technical Provisions: The solvency regime and technical provisions are based on factor-based calculations without regard to risk nature. This needs to be upgraded to a risk-based framework.
• Accounting and Auditing: Poor accounting and auditing practices hinder effective supervision and timely disclosure. NAICOM should collaborate with the Financial Reporting Council (FRC) to improve the reliability of financial statements.
• Capital Requirements: Minimum capital requirements are high compared to other developing countries. For example, non-life insurers require a minimum of 3 billion Naira (about US$19.14 million), which is three to six times higher than Solvency I regimes.
• Consumer Protection: There is a need to improve consumer protection, particularly in the context of compulsory insurance. NAICOM should enhance disclosure standards for intermediaries and consider electronic bidding models for annuities to reduce intermediation costs.
• Reinsurance: Reinsurance with foreign reinsurers requires NAICOM approval, and mandatory cessions, preferential tax treatment, and supervisory exemptions create an unlevel playing field.
• Regulatory Initiatives: NAICOM has implemented various initiatives, including a voluntary code on corporate governance, risk management guidelines, and anti-money laundering (AML) and know-your-customer (KYC) procedures. The adoption of IFRS from 2012 and a roadmap toward risk-based supervision have been introduced.
• Market Development Plan: A three-year market development plan was launched in 2009 to increase market capacity, improve efficiency, and enhance consumer protection. However, the target premium level of 1 trillion Naira in 2012 was not met.

Key Recommendations

• Legal Clarification: Clarify the legal status of NAICOM's guidelines to ensure enforceability.
• Upgrade Solvency Regime: Move toward a risk-based solvency regime that reflects the nature of risks in each insurer's portfolio.
• Improve Accounting and Auditing: Enhance the reliability of audited financial statements through collaboration with the FRC.
• Review Capital Requirements: Evaluate the appropriateness of minimum capital requirements to balance risk, return, and market development.
• Strengthen Enforcement: Improve enforcement of compulsory insurance to generate a more stable premium income.
• Promote Consumer Protection: Enhance disclosure standards and consider electronic bidding models for annuities to reduce intermediation costs.
• Review Mandatory Cessions: Reconsider the exclusive use of local reinsurers for certain types of business to promote fair competition and knowledge transfer.

Regulatory and Supervisory Environment

• NAICOM's Role: NAICOM is responsible for licensing, approving premium rates, and protecting policyholders. It is funded by industry levies and government grants, with 30% allocated to industry capacity upgrades and 20% to development and compensation.
• Supervisory Efforts: NAICOM has strengthened its supervision and enforcement efforts, including the issuance of codes and guidelines, and the adoption of IFRS.
• Risk Management: Risk management frameworks have been introduced, and NAICOM is working toward a risk-based supervisory regime by the end of 2013.
• Corporate Governance: The Code of Good Corporate Governance (CGCG) was introduced in 2009, and NAICOM has implemented a voluntary code on corporate governance.

Conclusion

The Nigerian insurance sector is underdeveloped, with low penetration and a need for regulatory and supervisory improvements. NAICOM has made progress in strengthening the regulatory environment, but there are still challenges in solvency, capital requirements, and consumer protection. The sector requires further development to meet international standards and support economic growth.