What becomes of the tier-based capitalisation earlier proposed for insurance companies in 2018, which was later cancelled following resistance in some quarters, is not known yet.
But the industry regulator, National Insurance Commission (NAICOM), is still bent on implementing its risk-based capitalisation that will require companies to play according to their size.
NAICOM is still committed to ensuring that insurance companies only underwrite risks in areas where they have the required capital.
This, in 2019 and going forward, will see the industry witness stricter regulations in the area of risk and claims management, which will also require that board of directors and external auditors of insurance companies are held responsible if anything goes wrong with firms under their watch.
In the new dispensation also, some insurance companies will be barred from taking new risks until they are able to meet certain capital requirements by the regulator. Companies that owe claims to consumers of insurance companies will be forced to settle claims obligations from their capital, and also be given timeframe within which to recapitalise or be penalised stiffly.
Mohammed Kari, commissioner for insurance/CEO, NAICOM, had told BusinessDay in an interview that insurance industry was used to resisting change, which is why the industry is crawling to date.
“It is in our character to resist policy change, that is why we have remained where we are till today, running behind the banks who are open to change,” Kari had said.
Sunday Thomas, deputy commissioner for insurance, technical, NAICOM, said the insurance industry in 2019 and going forward would see the hand of the regulator more than it has been to meet expectations of all the stakeholders.
In a paper titled ‘The Role of the Regulator in Shaping Insurance Industry Performance in 2019’ presented at the Chartered Insurance Institute of Nigeria Business Outlook in Lagos, Thomas said there were rising supervisory expectations, reflecting the growth of principles-based supervisory approaches that emphasise the importance of governance, culture, and management approach and the outcomes.
“A sound regulatory and supervisory system is panacea for maintaining a fair, safe and stable insurance sector for the benefit and protection of the interests of policyholders,” he said.
Thomas also noted that effective insurance regulation supports economic growth, adding that adequate policyholder protection is critical to sustaining the long-term viability of the insurance sector as protection of policyholders is a necessary precursor to building and maintaining trust in the insurance industry.
He said regulation is key to the development of the insurance sector, imploring operators to embrace the various regulatory changes.
To ensure protection of policyholders, Thomas said the commission would strengthen the complaints resolution mechanism, increase regulation on claims handling, and create awareness to enhance consumer literacy level.
Modestus Anaesoronye
