The Nigerian Insurers Association (NIA), the umbrella body of insurance companies in Nigeria, has vowed to tackle the anomaly associated with the provision of 2007 income tax law arguing that the law was made out of improper understanding of the insurance subsector of the economy.
The association noted that the law as currently in force has the capacity to crumble the subsector if to remain in force, according to the director general of the association, Mr. Sunday Thomas.
Mr. Sunday Thomas disclosed this when the Management of Champion Newspapers Limited led by its Group Managing Director/Editor-In-Chief, Mrs. Nwadiuto Iheakanwa paid a courtesy visit to NIA’s Secretariat in Lagos at the weekend.
He noted that NIA has commenced consultation with appropriate authorities, the Federal Inland Revenue, and both Minister and Minister of State for Finance in a view to addressing the issue.
According to the underwriters, the imposition of multiple taxes on the operators is a threat to the existence of companies and by extension the sector, contending that no company would be in existence if all provisions of that law is enforced because they would be paying more tax than the income made.
“2007 Income Tax, I think there was a misnoma that was brought into that law. Insurance companies were taxed based on inadequate knowledge and that, we’ve been trying to correct. I think somebody is listening somewhere. I want to believe that in no time that impediment will be removed because if the provision of that law is fully enforced is not likely you have any company operate in the industry because the tax will be paid more than the income they are making, that is the interpretation. If it is applied as it is no company will be in existence.” Thomas lamented.
Speaking on regulation, the NIA boss noted that the present crop of regulators at the National Insurance Commission (NAICOM) has brought about what he described as developmental regulation in addition to compliance regulation.
According to him, the introduction of some market development initiatives such as the Market Development and Restructuring Initiative, microinsurance and the enforcement of compulsory are developmental regulation that have opened up business windows for operators and provide the market with choice products that meet the need of the insuring publics.
Thomas noted that unlike in the past when regulation was all about compliance, the shift in the paradigm has also brought about understanding of policy issues and cordiality between the regulators and operators, noting that the industry has leaned to void those things that used to bring rancor between both.
“I think the industry has learned to avoid those things that used to cause rancor in the past as a result of, probably, not having the full understanding of the modality of operation of both operators and regulators. And in the system where you have to relate with another you can’t hold to your gun. One; there must be clarification of issues; people must understand why things are being done in a particular way.”
Asked to expatiate on what he meant by developmental regulation, he said; “Before now what we used to have was the issue of compliance, you put the law down saying the law say this, have you done this, the law says this, have you done this? Do you have this, you suppose to have that, those things have they been done?’
“Then you come, you have a check lists but what they are doing now… you must heard of MDRI (Market Development and Restructuring Initiative), this is an initiative of the regulator. And what is it about? It is the enforcement of Compulsory insurances essentially. This is developmental; this is adding to the revenue base and supply of products to the market.”
“You have heard of microinsurance, it is the initiative of the regulator. It is meant to create market at the lower level of the pyramid, increase penetration in the market, what will you call that…developmental.”
Addressing the perception in some quarters that insurance industry is bored by over regulation, Thomas explained thus; “I don’t know if you ever heard that if the regulator had done this and that, do you call that under-regulation? That is what it means, they may not call it under regulation but some of the operators would say if the regulator has done this or that most likely the market wouldn’t have been like this which means they have shared the responsibility in some areas. I think what they call over regulation is probably, the issue of penalty.”
Citing the enforcement of the International Financial Reporting Standard (IFRS) which the Commission adopted in 2012, he said the issue is all about change and that people naturally would always want to resist it, for him it is only a change that can bring about the desired development and growth.
“At times my position is so difficult haven spent 17 years as a regulator I don’t know how I can speak and not to speak as a regulator and that is the challenge I have. Because as long as you focus on others and you do not examine yourself you are not likely to get it right. I think the industry is coming to understand best practices, and how to do things in a way that is quite developmental that is going to grow the market. So it is hard at the beginning. If you remember two years ago when we started the IFRS, it was very difficult but many people are getting use to it now and am sure that by two years down the line it will fizzle out, we would have gotten and fully adapted to it, so change is the most difficult but change is what bring about growth.”
The DG thanked the management of Champion Newspapers for the visit noting that it is the first time the management of a media organization that would visit the secretariat of the association as he pledged to mobilize his members to support the Champion Insurance Day Lecture/Luncheon. He described Champion Newspaper as the first to have introduced and dedicated pages of its publication to insurance reportage in the country.