‘Adequate regulation key to unlocking sector’s potential’
The National Insurance Commission (NAICOM) has admitted that proper regulation of insurance activities in the country will contribute to rapid growth and development of the nation’s economy.
This assertion was made at a forum in Lagos by the Commissioner for Insurance, Mohammed Kari, who said the recent growth witnessed in the industry was a result of strict regulations to ensure that the conduct of the sector’s businesses is guided by strong adherence to guidelines, as well as good corporate governance.
He explained that the need for more regulation of insurance industry in the country is even more relevant today than five or 10 years ago. Kari also noted that this has minimised unhealthy competition- rate undercutting that routinely causes insurers to go out of business, leaving consumers unable to be indemnified upon filing claims.
According to him, while regulation has increased financial inclusion, access to credit and creating deeper reserves of investment capital at individual and collective levels, it has also promoted compliance and reaching of regulations’ outcomes, improving policies, institutions and practices.
He said: ‘‘Maintaining a fair, safe and stable insurance sector for the benefit and protection of the interests of policyholders and beneficiaries to an insurance contract is one of the benefits of regulation.’’
He said that the regulator is addressing the increasing presence in the market of insurance groups and financial conglomerates, as well as financial convergence, adding that this has further promoted confidence in the financial stability of the financial system’s sub-sector.
On compliance expectation, Kari pointed out that Nigerian insurance institutions must have respect for the regulator, its rules and regulations, adherence to the laws and regulations of the land, healthy competition and good market conduct, as well as adherence to the Code of the Corporate Governance.
He therefore, charged the operators to embrace effective and efficient risk management practices and processes, eschew unhealthy market practices, rate cutting, return premium, market cooperation and self-regulation.
“Insurance needs adequate regulation, given its inverted production cycle, where the payment made upfront exacerbates the need to protect the product that consumers buy”, he said.He stressed that effective insurance regulation enthrone good market conduct which ensure fair treatment of the consumers, financial inclusion, incentivise risk reduction behaviours and facilitating economic recovery after a loss has occurred.
Consequently, he said, regulation is an essential part of increasing access to insurance, while advancing economic growth, sustainable development and human dignity.