The National Insurance Commission has warned that it will deal decisively with any insurance company that will be involved or charges fees on any illegal transactions.
The Deputy Commissioner (Technical) of NAICOM, Mohammed Kari, the Commission, in a circular recently stated illegal fees such as over-riding commission, business acquisition fees and other similar
fees not provided for, by insurance laws shall not be solicited, deducted, offered or paid in respect of any insurance transaction in Nigeria.
Recall that insurers have been indulging in payment of some illegal fees like overriding commission, return premium, business acquisition fees especially to insurance brokers in order to attract business from them.
However, NAICOM states that an insurer, who grants or receives such commission, has contravened Section 53(1)-(3) of the Insurance Act 2003 and would be appropriately penalised.
According to the Commission, “Each insurer shall submit a quarterly return on the rebates, brokerage commission and other fees paid out or payable on all its production during the preceding quarter to the Commission, not later than 14 days from the end of the quarter.”
Moreover, it stated that a broker should submit a copy of his dedicated client account duly stamped and signed by the bank and a quarterly return of the brokerage commission received or deducted at source, taxes paid and rebates received during the preceding quarter on all businesses not later than 14 days from the end of the quarter, to NAICOM.
NAICOM warned that no insurer, broker or its agents should charge or receive premiums in excess of the actual premium on an insurance policy that may result in refunding the excess amount paid, with the intent of returning the excess, either by cash or otherwise to the insured, its agents or any party thereafter.
The regulator however stressed that any insurer that fails or omits to comply with the content of the circular shall be penalised in line with relevant provisions of insurance guideline and such other penalties as may be prescribed by the commission from time to time.
NAICOM pointed out that the first report as contained in the circular, covering the quarter 1st April to 30th June 2014, shall be submitted not later than the 14th of July 2014, adding that strict compliance is required.