IFRS demand hampers brokers’ ability to submit returns

…NAICOM may not renew licence of defaulting firms

THE 2012 compliant accounts of the International Financial Reporting Standards (IFRS) set by government for insurance and brokerage entities, may have hit hard on the ability of insurance brokers to submit their audited financial statements for 2013.

   As a result, the National Insurance Commission (NAICOM) has warned defaulting insurance brokerage firms that any intermediary that has not received approval for its audited financial statement and accounts for 2013 will not get their licences renewed in 2015.

   According to statistics provided by the Commission, out of 500 insurance brokers operating in the country, only 200 brokerage firms were able to submit their 2013 financial statement and accounts to the Commission.

  Specifically, only 54 insurance brokerage firms out of the 200 had their 2013 accounts approved by the commission, while the remaining 300 firms of the total 500 firms have not presented any financial report.

  The Director of Supervision, National Insurance Commission, Nicholas Opara, speaking at a training workshop on IFRS for Insurance brokers in Lagos at the weekend said that as at March 2015, two years after the new IFRS dispensation came into effect, only  200 insurance brokers have submitted 2013 financial report to the commission.

   According to him,  the remaining 300 brokers by our register have not attempted to submit anything. He regretted that among the 200 insurance brokers that have submitted their report, majority of them despite  the fact that the country had migrated to IFRS from the Nigerian Generally Accepted Accounting Principles (NGAAP), only recycled the NGAAP  and filed with the commission for  approval.

  He asked the 60 participants at the workshop whether these intermediaries  are no longer interested in doing business in the market, because the 2015 licence will not be renewed without obtaining approval of the 2013 audited financial statement and accounts.

  Besides, he reminded the brokers of , Section 42 (4)  of the Insurance Act 2003 which says “An insurance broking firm that contravenes the provision of this section is guilty of a offence and liable on conviction to a fine of N5,000 per day for each day of default.”  He reinforced that this provision will be i effectively implemented.

   He told the participants “We have promoted training on IFRS over and  over again, preaching the gospel of IFRS. Today we have got the approval of the Commissioner for Insurance to conduct  additional training for brokers on IFRS. The reason for it is because the accounts you are submitting to us on IFRS is nothing to write home about, to find  out the problems and  give  necessary assistance and training.

  Opara,  perhaps reminding the brokers of  NAICOM boss warning  recently “We have, however, witnessed some measure of impunity by our colleagues who see some of our gentle actions as signs of weakness. Besides, the effect on the regulators, market indiscipline is now threatening the stability of most companies and the prosperous future that our environment has provided.

  “We have seen insurers destroying tariffs that were established to ensure they have strong financial bases. Unbridled, unsustainable and technically unsound rates are being offered for risks by the underwriters more out of the need to market than to insure.”

  Daniel continued “The insurance brokers are also not left out in these malpractices. Some of them even operate without proper documentation and in some cases mislead the public by presenting different sets of documents for different purposes. They operate as if there are no law or rules or that these do not matter. They are willing compliances in any unprofessional act as long as they get appointed

   He warned “It is time to put a halt to all indiscipline if we are to move forward. The commission will henceforth wield the stick and publicly too. Gone are the days of keeping sanctions of criminal breaches  within the family. Laws are made to be obeyed and sanctions are available for anyone who violates the law. We will be decisive, short and sharp. No long lasting prosperity will be built in an atmosphere of indiscipline and disorder.”