The National Insurance Commission (NAICOM) and the Bureau of Public Procurement (BPP) have signed a memorandum of understanding (MoU) to standardise requirements for issuance of insurance bonds and public procurement.
Bond insurance, or financial guarantee insurance, is a type of coverage purchased by bond issuers (like municipalities or corporations) that guarantees the repayment of principal and interest to investors if the issuer defaults.
The commissioner for insurance (CFI), Olusegun Omosehin, said during the MoU signing on Monday in Abuja that the pact would ensure transparency in the sector.
Mr Omosehin added that it would ensure that citizens benefitted from the transformation in the sector.
He said the commission had the mandate to ensure that insurance service providers lived up to their obligations by being financially stable and able to provide necessary support for policyholders when pandemics happened.
Mr Omosehin said the BPP had the mandate to guide procurement processes of public services and insurance was the one of the services hence, the need for the collaboration.
According to him, insurance being one of those services that will be procured needs to be properly understood; the guidelines, the requirements, and what it should deliver.
The CFI said the major priorities of the commission to include insurance consumers protection, enhancing the capacity of regulators and ensuring the financial stability of insurance entities, among others.
”But in this journey, we have come to realise that it is almost impractical for us to start the transformation process without the necessary collaboration. So, we identified BPP as one of the critical agencies that is critical to our success in our transformation journey, and hence we come to you.
”And beyond that, we can also be able to track how insurance procurements are going on and when people actually get approval to procure, whether they really procure.
”The dream and the vision of Mr President can only be attained when we have institutions like yours partnering with other agencies to ensure transparency in the procurement process,” he said.
The director-general of the BPP, Adebowale Adedokun, commended NAICOM for its transformative moves.
Mr Adedokun said that any growing economy must have a strong and vibrant insurance sector where the regulatory frameworks were well understood, implemented, and patronised by the citizens.
He said the Bureau would rely on the data bank and expertise of NAICOM to address insurance procurement to improve our value for money in the insurance sector.
“We realised that a lot of insurance companies need to be updated in their knowledge of how procurement is being carried out. We want to also appeal to you that we will not condone unethical practices.
”Everybody in this sector that you regulate must comply with good governance, code of conduct and good ethical practices. We receive requests for insurance procurement and we do not have the total technical expertise.
”So, this handshake today is to say that any time we have requests for insurance, we will seek your guidance to be sure we do not give approvals that we cannot defend,” he said.
A working group was constituted, drawn from the two agencies to drive the insurance procurement process.
(NAN)