Yemisi Izuora
Nigeria’s insurance sector is bracing up for unified implementation of the Corporate Governance Code scheduled to begin in April.
The National Insurance Commission, NAICOM has indicated its readiness to begin its implementation 7 years after it was introduced.
Since the introduction of the code, NAICOM has not been firm on it, but it said the code’s enforcement would begin on 1 April, 2016.
However, operators said implementation had been ongoing but at various level of compliance by individual companies.
Sunday Thomas, Director General of the Nigeria Insurance Association (NIA) told Oriental News Nigeria that its implementation will further bring sanity in the industry.
“I am aware that a committee is working with the regulator and if there is an agreement then full implementation will start, but I can tell you that companies are observing the code just that NAICOM is coming up with a strategy to ensure compliance” he said.
The implementation decision follows NAICOM’s announcement that underwriting firms in the insurance industry will no longer have a uniform capital base, just as it directed operators to recapitalize according to the risks they undertake.
General Insurance Firms are now to recapitalize to the tune of N3 billion, while Life Insurance Companies must have a capital base of N2 billion. Composite Insurance Firms have also been directed to raise their capital base to N5 billion.
NAICOM perhaps reached the decision on recapitalization due to the rising value of insurance risks, courtesy of the current financial crisis that has affected all sectors of the economy.
The move was also made to ensure appropriate implementation of risk-based supervision in the industry.
Operators in the insurance industry have reached an agreement with NAICOM to transit to risk based supervision to enable operators up their capital according to their segment of the insurance business.
Risk based supervision will entail supervisors reviewing how insurers identify and control risks. The supervisors will also assess system and individual firm risks, and intervene according to the assessment made. Through this process, supervisors allocate resources to insurers with the greatest risk.
According to Oye Hassan Odukale, Managing Director of Leadway Assurance Plc, the board of insurance firms are now to determine the risk capital for their companies, which would be supported by the appropriate capital. He refers to this as a new concept in the Insurance industry.
‘’We are transiting to this new initiative and NAICOM is taking us through it so that we can move our capital structure to this base,” Odukale said.