Mr Fola Daniel, Commissioner, National Insurance Commission (NAICOM), on Thursday said that supervision of insurance companies would now be risk-based.

He said that supervision of insurance companies would now be based on their ability to take up risks. Daniel disclosed this in Calabar during a two-day retreat for journalists.

The programme has “Migration to risk-Based Supervision: Prospects and Challenges.” He said that risk-based supervision was predicated on relationship between risk and capital. The higher the risk profile of the insurer, the higher the capital it must hold. An effective regulatory authority is able to require an insurer to take timely preventive and corrective measures if the insurer fails to operate in a manner that is consistence with sound business practices,”
he said.

Daniel said that the shift from compliance-based supervision to risk-based supervision was due to the recent financial crisis that saw the failure of many financial institutions worldwide. He said it was also to ensure that the local industry met international standards and best practices. The commissioner said that the general understanding was for the supervisors to ensure that the institutions understood and dealt with the risks they were undertaking.