NAICOM sees Risk-Based Capital driving Nigeria’s insurance sector growth
National Insurance Commission (NAICOM) has expressed its readiness to drive Nigeria’s insurance sector grow through Risk-Based Capital (RBC) requirement.
This is in line with NAICOM’s vision to maintain a safe and sound insurance industry, competing globally and contributing optimally to the economic growth and development of Nigeria.
Risk-Based Capital (RBC) requirements are developed to determine the minimum amount of capital required of an insurer to support its operations and write coverage.
“The current Risk-Based Supervision environment will be taken to new level which is Risk-Based Capital (RBC),” said Thomas Olorundare Sunday, Commissioner for Insurance/CEO National Insurance Commission (NAICOM).
He noted this on Wednesday at a breakfast meeting with editors in Lagos, adding that there will be no push-back against the Risk-Based Capital regime.
“One-size-fits-all will no longer be operational. By end of 2023, we will ensure Risk-Based Capital is operational,” he added.
In a Risk-Based Capital (RBC) regime, the insurer’s risk profile (that is the amount and classes of business it writes) is used to determine its risk-based capital requirement. Majorly, four categories of risk are analyzed in arriving at an insurer’s minimum capital requirement: asset, credit, underwriting, and off-balance-sheet.
As Nigeria’s economy grows, NAICOM’s goal is to ensure safety and soundness of insurance institutions, stability of insurance sector, protection of policyholders and third parties covered by insurance contracts, optimal development of the Nigerian insurance market, public trust and confidence in the insurance system, and effectiveness in use of resources and compliance with relevant laws.
Sunday also remains bullish on the commission’s commitment to good corporate governance by insurance sector operates as the drive for financial inclusion and products penetration continues.
The total assets of the country’s insurance industry increased to N2.5 trillion in 2022 as against N1.3trillion in 2018. The Commission has set eyes on a N1trillion gross premium income (GPI) for the insurance industry after it increased to circa N730billion in 2022.
The Commissioner noted that National Insurance Commission is leveraging the instrumentally of Nigeria’s states on compulsory insurance such as motor insurance, etc.
The National Insurance Commission (NAICOM) was established in 1997 by the National Insurance Commission Act 1997 with responsibility for ensuring the effective administration, supervision, regulation and control of insurance business in Nigeria and protection of insurance policyholders, beneficiaries and third parties to insurance contracts.