-As Calls for Reform in Liberia’s Insurance Sector Intensify 

IPNEWS: The leadership of the National Insurance Company of Liberia (NICOL) is facing increasing criticism over its role in stifling private sector growth and discouraging investment in the insurance industry. In response to a recent article carried by the authoritative Independent Probe Newspaper, profiling the questionable trends of NICOL’s impact on the insurance sector, Mr. Nortu Jappah, head of the state-owned entity, appeared to reveal a fundamental misunderstanding of the company’s responsibilities and role as he seeks to kick out Liberian insurance companies out of business.

In a WhatsApp message to the editor, Mr. Nortu Jappah writes:

“NICOL is not, repeat, not the regulator. The Central Bank of Liberia (CBL) is; so, we don’t have the power to kick insurance companies out of business. Only the CBL has the authority.”

While technically correct that NICOL does not regulate the sector—this role indeed falls under the Central Bank of Liberia—many in the insurance industry argue that Nortu Jappah’s response misses the point. NICOL’s presence, backed by an outdated legal framework, continues to crowd out the private sector, dampening growth and discouraging much-needed investment in the industry contrary to President Joseph Boakai’s desire not to do business as usual.

At the heart of the issue is the PRC Decree 81, which brought NICOL into existence. Industry experts believe this decree, which dates back to the era of military rule, is outdated and unsuitable for the modern insurance landscape. Stakeholders claim that the decree essentially gives NICOL an unfair advantage, reducing competition and limiting the opportunities for private insurers to grow and innovate. The current framework creates a monopolistic environment where NICOL dominates the market, preventing the development of a healthy, competitive insurance industry.

“We need reforms that will not only benefit NICOL but open up the insurance sector for everyone,” an industry insider remarked. “The law needs to be repealed and replaced with one that allows for the establishment of a national reinsurance corporation. This could support the growth of the insurance sector, bringing in more investment and offering more options for consumers.”

The idea of a national reinsurance corporation has been gaining traction as a solution. Such a corporation would provide financial backing to insurance companies operating in Liberia, ensuring they have the capacity to cover large claims and stimulating the growth of the sector. This type of initiative would modernize the industry, attract new players, and bolster consumer confidence.

Many industry players have voiced concerns over NICOL’s current trajectory, calling for a complete overhaul of its legal framework. Without significant reform, they warn that the state-owned company will continue to hamper the sector’s development.

If the government is serious about supporting Liberia’s economic growth, experts suggest it should focus on creating an environment where private sector insurance firms can flourish. Reforming NICOL’s legal foundation and establishing a reinsurance corporation could be the first steps toward achieving this goal.

For now, however, NICOL’s leadership remains on the defensive, while calls for change continue to grow louder. How the government and NICOL respond will likely determine the future of Liberia’s insurance industry.

Earlier this week, an Independent Probe Newspaper investigation reveal how Mr. Jappah has designed a plan to kick out private insurance companies using his leverage with key allies within the government to position all insurance contracts for government employees thus depriving other Liberian private insurance their right to fair share.

NICOL according to IPNEWS investigation is actively pursuing insurance clients and businesses at the detriment of Liberian owned companies.

NICOL is providing vehicle and other insurance services in direct competition with Liberian owned companies. This is not good for the Liberian business environment.

Sources tell the authoritative Independent Probe Newspaper that the initial intent of the government when NICOL was established in the 1980s was to help support an industry that was quite small and needed reinsurance support services. Liberia at the time had only about five or six insurance companies, most of which were foreign owned, and international partners encouraged the strengthening of the industry.

Since then, several Liberians have invested and opened several insurance companies in Liberia. Currently 10 of the 15 companies licensed to operate insurance businesses in Liberia are Liberian owned and staffed. Insurance remains one of the only sectors where Liberians own a majority of the companies, unlike many of the other major ones – foreign entities or individuals are the majority in terms of service providers in banking, mining, extractive industries (gold, iron ore), supermarkets, building materials and many more.

It is therefore very concerning that government would actively move into this sector to compete against Liberian owned businesses. Insurance is a very careful business with many risks. How can government provide insurance to itself, as it seems to be doing with NICOL? That means the risk, which is the purpose of getting insurance, is still maintained by government. No real protection is in place, if there is a vehicle insurance accident claim from one government office, another office (NICOL) will pay? This does not make sense for a government where many sectors are underfunded.

NICOL was established in a very different economic environment, when government support to the industry was needed. After the civil crisis began in 1990, NICOL went dormant for over 15 years. The first post-civil crisis administration of UP/President Sirleaf decided to not reactivate NICOL, the assumption is – it was not seen as in the best interest of the Liberian people or Liberia, the private sector was already beginning to actively build the insurance sector and government had many other priorities than entering a competitive market.

The Weah administration chose to reactivate NICOL in 2018, though it is questionable whether that was to the help or detriment of the Liberian people. Since 2018, NICOL has not met any of the requirements under law to operate as an insurance company, making government both referee and player. Referee, because Central Bank regulates insurance, and a player through NICOL, a player that is not following the rules, having not met all of the CBL requirements to be an insurance company. Other Liberian companies have been shut down for not meeting CBL standards, however NICOL continues to do business and sources indicate NICOL has not met the requirements to even get a CBL license to operate.

With the current Administration’s decision to continue with NICOL, many are concerned as to what benefit NICOL will bring to the Liberian people. Currently there seem to be only two effects of continuing with NICOL are so far.

The first is taking business away from Liberian companies and their employees and families.

The second is – NICOL now has a 2024 budgetary allotment of estimated 250,000 USD that brings no benefit to Liberia. There are so many other areas these funds would be of better service to the Liberian people – including health, education, road maintenance, the needs are many.

It is important that government stays out of competitive businesses such as insurance. Rather encourage Liberian business to grow and pay their taxes. Should government even be in competition with the private sector? Our Leaders need to make sure whether NICOL is in the best interest of improving Liberia and the lives of the Liberia people and make decisions that help Liberian businesses not hurt them.