NAICOM test-runs risk-based supervision with 10 firms

The National Insurance Commission (NAICOM), has revealed plans to begin the experimentation of the industry’s Risk-Based Supervision (RBS) with 10 companies.

This was disclosed by the Deputy Commissioner, Technical, Sunday Thomas, at the Chartered Insurance Institute of Nigeria (CIIN) 2017 Professional Forum in Ogun State, stressing that the companies will be used to test run the initiative before its full implementation.

It was learnt that the Commission will soon inform the firms that will be involved in the exercise, while its executives would be deployed to the firms to assist them in the implementation of the initiative.

The Commissioner for Insurance, Mohammed Kari, said in line with the RBS initiative, insurance institutions must therefore, review, and where necessary, enhance their capital, risk management, and governance in order to survive the interesting future ahead.

He added that barring hindrances such as high cost of implementation, paucity of requisite data and skills, and political obstacles; intelligence implementation of a strategic consolidation in Nigeria will boost the overall performance of the industry, and position it as one of the foremost in the continent.

“As a result of increased risk coverage, there will also likely be an increase in the minimum capital requirements, and potential reduction in the qualifying capital of insurance companies.

“We expect this to lead to further consolidations and stability in the industry, which will subsequently create an influx of foreign investment.

“After such an exercise, we would have no reason to continue with the suspension of issuance of new operating licenses. For the period since that policy was introduced, there had been no local merger or acquisition, and I believe once more the market had lost an excellent opportunity to strengthen itself from within.

It is no surprise that big international players are taking position in our market; they obviously see something you don’t. In the field of fair play there is hardly more than a couple of companies that can compete with them,” he said.

He noted that the insurance market by all standards deserves to be reckoned with in the International arena, but wonder how that can be achieved when operators operate in uncoordinated silos.

However, “We have to wake up, sort ourselves out and be ready to play our role at least in the sub-region. For operators that are members of the West African Insurance Companies Association (WAICA), it is common knowledge that the integration of members countries into a single market is on the front burner,” he said.