By Rosemary Onuoha
The National Insurance Commission, NAICOM and insurance operators are divided over the timing of the implementation of the Risk Risked Based Supervision, RBS, in the industry
While NAICOM said it would commence implementation of RBS in 2018, some insurance operators averred that the sector is not ripe for the transition.
Also in contrast to NAICOM’s belief that RBS will ensure safety and soundness of the insurance sector, some players are skeptical about the policy arguing that Nigeria has its own peculiarities.
Speaking in Lagos at an event organised by the Nigeria Council of Registered Insurance Brokers (NCRIB), NAICOM’s Deputy Commissioner for Insurance, Technical, Mr. Sunday Thomas, said 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. “Your institution will be looked at, profiled, and the appropriate regulatory policies will apply,” Thomas stated.
Also speaking at the event, Chairman of Mutual Benefits Assurance Plc expressed a note of caution. 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.”