ALTHOUGH the insurance industry is crowded with insurance brokers, many of them are concentrated in a particular area and don’t contribute significantly to the growth of the premium income in the sector.
Consequently, the national Insurance Commission (Naicom) should trim down the number of brokers in the insurance industry or look for a way to make them spread across the country.
Mr. Yemi Soladoye, an industry expert who gave this postulation, noted that of the over 300 brokers operating in the insurance industry, not up to 40 of these number mobilise up to N30 million annually.
In his words “The insurance industry is populated by brokers and the case is made worse because not up to 40 brokers mobilise up to N30 million in a year.” He therefore tasked the regulatory body to look for ways of making these brokers active in premium generation.
Meanwhile, Mr. Shola Tinubu, managing director of SCIB Insurance Brokers has said the illegality in collecting or giving overriding commission is both on the part of the receiver and also the giver and never one sided.
Tinubu noted that overriding commission is not only an unethical and illegal act committed by just the broker but also by the underwriter. Reacting to the accusation that it is only brokers that are guilty of overriding commission, Tinubu posited that if insurance brokers were to disappear from the market, malpractice will continue.
While revealing that underwriters expect brokers to connive with them to defraud the client, Tinubu warned that both brokers and insurers should stop apportioning blame on who started the overriding commission trend because both parties are guilty of the crime.
Also, Mr. Yemi Soladoye, an industry consultant, noted that both parties are guilty because if there is no giver there won’t be any taker.
Over the years, brokers and insurers have accused each other of demanding and giving overriding commission in addition to the statutory commission normally charged for insurance business. Consequently, brokers have been accused of preferring to give business to insurance companies that are willing to play ball.
Overriding or contingent commissions is a term used to describe extra charges both open and hidden imposed on insured for services rendered to them by insurance brokers. The term also covers a situation where underwriting firms pay insurance brokers extra commissions to bring juicy businesses to the paying company.