Chiamaka Ajeamo, [email protected]
An alleged $179 million insurance policy investigations against the Nigerian National Petroleum Corporation (NNPC) seems not to hold water any longer as indications and statistics from industtry stakeholders have continued to unveil the true state of affairs on workers welfare.
Findings showed that most of the allegations and issues raised on the matter were insurance industry related and within the purview of the regulatory authority of the National Insurance Commission (NAICOM).
This also means that only NAICOM as the apex agency is competent to give information and answers to such alleged breaches and issues of under-utilisation and low retention capacity.
For instance, investigations on allegations of ‘$179 million premium being allegedly paid by NNPC and Joint Ventures (JVs) for non-existing assets overseas’, showed that from 2013 to the current insurance year (2020/2021), premium paid by NNPC has been reducing consistently notwithstanding that the assets value have been increasing through acquisition of new assets and new investments.
It was noted that from a premium of $79.8 million and asset value of $50.3 billion in 2014/2015 insurance year, the premium has been on downward trend to $39.6 million with an increased asset value of $68.9billion for 2020/2021 insurance year.
Furthermore, on ‘alleged huge unsettled life insurance claims, poor handling of Group Life insurance schemes, its effects on the motivation and productivity of working-class citizens and non-payment/un-allowed deductions on entitlements of the surviving families’; report has it that NNPC maintains a very robust cover for both human and material assets of NNPC. The report showed that the Corporations Group Life Assurance (GLA) scheme is very effective and professionally managed such that they collect all discharged claims to the satisfaction of next of kin(s) of deceased employees.
In fact, the report which presented a historical table of NNPC GLA, scheme from 2010 to 2019, revealed that in the last ten years, the NNPC insured its workers to the tune of N25.2 billion cumulative premium, while N23.3 billion claims was paid to the families of deceased workers within the ten years by the insurance companies underwriting the risks.
The N25.2 billion premium was paid to life insurance companies which are expected to pay death benefits to the family or next- of-kin of the deceased NNPC workers in the country, the report stated.
A breakdown of the report showed that NNPC paid N2.6 billion premium in 2010 with N1.8 billion claims collected. Also in 2011, findings show it insured its workers with N2.4 billion premium while N2 billion claims settled; and in 2012, a premium of N2 billion was paid while N1.5 billion claims was collected.
The 2013 premium paid under the GLA policy was N2.6 billion while claims collected was N2.7 billion. The claims collected in 2014 was N2.3 billion as against N2.6 billion premium paid by NNPC.
In 2015, a premium of N2.3 billion was paid, with N2.9 billion total claims received, while 2016 saw a claims collection of N2.3 billion against N2.4 billion premium paid.
By 2017, the premium paid by NNPC was N2.3 billion, claims paid was N2.8 billion, while N3 billion premium was paid in 2018 and 2019 respectively, even though the claims for 2018 was N2.4 billion while that of 2019 was N2.6 billion.
In addition, on ‘alleged breaches on insurance business by industry practitioners; low retention capacity of dollar denominated insurance business and the effect on Nigerian economy’, it was gathered that the NNPC is a responsible corporate entity that values and respects all extant laws in its operations including those regulating insurance of assets and liabilities.
According to investigations, the contracting process and strategy of NNPC insurance placement is in compliance with the provisions of the Public Procurement Act (PPA) 2007, Bureau of Public Procurement Guidelines, the Insurance Act, NNPC Policy and Procedures Guidelines to mention but a few.
It was discovered that based on the robustness, integrity and credibility of NNPC insurance contracting process, the corporation has not had cause to resort to litigation in claims recoveries in the last ten years.
In addition, over these years, NNPC it was clear never received any query from any regulatory agency on compliance to process and procedure. Rather, they have always obtained approvals necessary and received recommendations from regulatory agencies.
Report displayed the NNPC insurance procurement process as very robust, open, transparent and competitive in full compliance with the provisions of Public Procurement Act (PPA) 2007, and the Corporation’s Supply Chain Guidelines.
The report explained that for the insurance of NNPC’s Oil and Assets and Liabilities, the bidding process usually result in the selection of insurance companies that passed the technical evaluation with one as the lead primary underwriter having scored the highest technical evaluation score.
Hence, it is the responsibility of the lead primary underwriter to appoint an international reinsurance broker and conduct a bidding process in the London commercial market with a view to securing a competitive pricing for NNPC; and the process is designed to guarantee the selection of underwriter with the lowest responsive bid.
Going further, it noted that the lead primary underwriter also leads the oil assets and liabilities account with other approved consortium of Nigerian insurance companies for insurance placements in line with NAICOM regulation, Nigerian Oil and Gas Industry Content Development Act (NOGICD) 2010, and Nigerian Content Development and Monitoring Board (NCDMB) guidelines. He explained that Reinsurance is statutory and the exclusive preserve of the primary insurers.
“While Section 6(i)(c) and 8(j) of the Insurance Act (2003) underscores the importance of reinsurance in the business of insurance, Sections 65(7) and 72(4) permits the insurance or reinsurance of assets overseas subject to the provisions of the Insurance Act and approval of the Commission (NAICOM).
“Therefore, there is no geographical limitation to the purchase and placement of insurance because of the international nature of insurance business.
“Importantly, NNPC insurance division is manned by some of the most qualified and experienced personnel in the insurance industry. Therefore, they ensure that adequate insurance cover at the most competitive price”.