Yemisi Izuora
There seem to be uncertainty and actual transition period of the the Risk Based Supervision, RBS, in the insurance industry.
The uncertainty stems from unpreparedness of operators to key into the new regime even when the National Insurance Commission, NAICOM has set 2018 as period of implementation.
As 2018 draws closer, some insurance operators complained of timing of its takeoff arguing the transition period is not ripe.
However the NAICOM’s insists that the RBS will ensure safety and soundness of the insurance sector.
At an industry event in Lagos hosted by the Nigeria Council of Registered Insurance Brokers (NCRIB), NAICOM’s Deputy Commissioner for Insurance, Technical, Mr. Sunday Thomas, maintained that there will be a shift from rule based to capital based regulation and that it will no longer be a case of one cap fits all, adding that, “Your institution will be looked at, profiled, and the appropriate regulatory policies will apply,”.
In his position, Chairman of Mutual Benefits Assurance Plc, disagreed as he said the regulatory body might be jumping too fast to implement the RBS without considering the peculiarities of the Nigerian economy.
He said, “We don’t know whether Nigeria is prepared for these policies. That was how they brought the Financial Reporting Council to us and we are still fumbling with it. Now NAICOM has joined some international associations and is bringing their rules and regulation to us without finding out the peculiarities of our country.”
On his part, Chief Operating Officer of Aiico Insurance Plc, Mr. Babatunde Fajemirokun, while speaking at a media parley in Lagos, said that due to inadequate actuarial skills in the industry, adopting the RBS could be challenging. He said that adopting ‘Solvency 2’ might be aggressive but it can be modified to country equivalents and apply it to the maturity of the country.
Speaking further on NAICOM’s position, Thomas said that when the RBS comes into effect, companies will not be allowed to transact business far and above their capital, which amounts to overtrading, adding that NAICOM’s goals for the regulated is to ensure safety and soundness of the insurance sector, facilitate the stability of the insurance sector, secure the protection of policyholders and other stakeholders in the industry, promote optimal development of Nigeria’s insurance market, engender public interest and confidence in the insurance sector as instrument of financial intermediation.
He said, “The International Association of insurance Supervisors, IAIS, established global regulatory standard and most jurisdictions have keyed into these standards and adopt it to their own environment for the purpose of implementation. And it is what NAICOM is doing. We joined in 1997 and since then have remained a member.”