The National Insurance Commission (NAICOM) has said there is a need to adopt risk-based supervision and risk-based capital before the industry can realise financial stability in the economy.

The commission also said to attain this, operators in the industry should strive to key into it if they want to compete with their counterparts across the globe and remain relevant in managing the risks of their existing and potential customers.

The Commissioner for Insurance, Olusegun Omosehin stated this at the Chartered Insurance Institute of Nigeria’s year 2024 Professionals’ Forum held in Abeokuta, Ogun State, with the theme “The Insurance Industry: Transformation Strategies towards Expanding Market Reach.”

The commissioner, represented by the Deputy Commissioner for Insurance, Finance, and Administration, Ekerette Ola Gam-Ikon, stressed the need for financial soundness and stability of financial institutions to hedge against the impacts of negative events in the world.

He said “We are all aware that major events in the world such as the COVID-19 pandemic, economic instability, climate change, rapid technological advancement, changing behaviour of consumers, crises across different parts of the globe, soaring inflation, instability in prices and many more have a direct impact on global financial markets hence have now altered the way financial services are carried out.

“Financial soundness and stability of insurance operators have become more critical than we can ever imagine.
To him, the adoption of risk-based supervision and risk-based capital has become inevitable if we want to remain significant in the management of risks of our existing and potential customers.”

According to him, the commission has resolved to pursue, as a priority, the safety and soundness of regulated entities. Remember the words of Benjamin Franklin: “One rotten apple, spoils the barrel”. We are all witnesses to what this has caused as an industry and are now more determined to rid ourselves of that cankerworm.

“Innovation and sustainability are some of the major emerging issues today. The insurance sector must embrace innovation to meet up with the rapid market changes, and changes in consumers’ preferences, tastes, and lifestyles.

Gam-Ikon urged operators to develop products that meet the demands of our market as innovation has taken the driving force in the financial services sector.