The National Insurance Commission (NAICOM), has issued an operational licence to Nigeria Police Force (NPF) Insurance Company Limited to commence general insurance business in Nigeria.
This is coming despite a recent opposition from some stakeholders in the insurance sector who objected to the idea of granting insurance licence to the organization.
According to a notice by NAICOM on its official X (formerly Twitter) account on Friday, November 29, 2024, the insurance regulator said NPF Insurance Company Ltd was presented with the operational licence having successfully fulfilled all registration requirements.
The licence was handed over to NPF Insurance by the Commissioner of Insurance, Olusegun Ayo Omosehin, in his office in Abuja, where he congratulated the company for meeting all the necessary regulatory standards, and expressed confidence in its potential to contribute to the development of the industry.
The notice from NAICOM reads, ‘’NAICOM today, November 29, 2024, presented an operational license to NPF Insurance Co. Ltd to commence general insurance operations in Nigeria, having successfully fulfilled all registration requirements.’’
What you should know
NAICOM had in July 2024 announced that it had commenced the process of registering the NPF Insurance Company Limited after receiving the application.
The commission said the company was incorporated on December 24, 2020, with the address at the Insurance Building Behind Louis Edet House, Force Headquarters Area 11 Garki, Abuja, FCT.
However, in August 2024, stakeholders in the insurance industry said granting operational licence to the Nigeria Police Force (NPF) would compromise the enforcement of the 6 compulsory insurance products in the market.
A former Commissioner for Insurance, Mohammed Kari, in a letter to the commission, advised that if the NPF Insurance Company Limited is granted an operational licence, there could be a compromise in the management and enforcement of compulsory insurance policies.
Kari noted that the authoritative nature of the police and their potential representation on the Board of Directors of the insurance firm could lead to undue interference in the management of the insurance company, compromising its independence and effectiveness.
The ex-insurance practitioner said the core operations of the NPF are fundamentally at odds with commercial activities, adding that the primary mandate of the Police is to maintain law and order, not to engage in business ventures.
He said, “The Police are a regulator of sorts; they cannot enforce the law on compulsory insurance and be a provider of insurance. The temptation to force motorists to take their company’s policy will be irresistible.’’
Kari said the structure and ownership requirements stipulated by Nigerian insurance laws and the Financial Reporting Council (FRC), necessitate a level of expertise that is currently lacking in the nominated Board of Directors of the proposed insurer.
He added, “Another requirement is a spread in ownership to avoid undue influence on the company by one shareholder. The NPF 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.’’
Kari said 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.
