Yemisi Izuora
The National Insurance Commission (NAICOM), is set to unveil a revised priority guidelines on Risk Based Supervision (RBS) for insurance operators.
Commissioner for Insurance, Mohammed Kari made the disclosure said the Commission has commenced migration of the insurance sector into the RBS regime when it introduced Enterprise Risk Management (ERM) and Code of Corporate Governance guidelines, among others.
According to the commissioner, The Commission is set to conduct one of the principal programmes in the RBS regime which is the mandatory training for directors of insurance firms.
He said: “We have since commenced migrating the sector into a RBS regime by the guideline we gave by the ERM and code of corporate governance. These are risk based. The only thing we have not come out with before is one of the principal programmes in the risk based, which is the mandatory directors’ training. This will hold on June 1 and 2.
‘’These are programmes for risk based and the training is to show that it has already started”.
The guidelines will require the classification of assets of the insurance companies to ascertain their capabilities to underwrite various risk portfolios in the industry.
The commission had also launched the sensitisation to educate operators on the need for a switch from rule-based regime to risk-based supervision for insurance to play effective role in the economy.
The Commissioner explained that consolidation does not mean just an additional capital, it may be redefined as the type of insurance business the companies want to operate.
“Today, we have capital as the only basis for operation and if you meet the minimum capital, you can operate. For instance, underwriting any cover without consideration to the obligation to stakeholders and that is why we have infractions in the industry, explaining why we have many players in the industry that do not add value to the services they provide both in the intermediary and insurance sectors.’’
“For companies to underwrite risk, they must have enough assets to cover the risks being underwritten. So, risk-based is being able to identify what is your financial capability. If your financial capability does not guarantee you to insure oil because of the huge capital layout involved in terms of obligations, you will not be allowed to insure the risks.”