The National Insurance Commission (NAICOM), has finally released a blue print guideline for the implementation of the Risk Base Supervision(RBS) model for the insurance industry.
The commission, released the long expected document to the industry operators at the recent insurers committee meeting held in Lagos recently.
It gave the operators four weeks to peruse through the document, give their recommendations and return it to the commission for final approval.
RBS, an European Insurance market supervisory initiative, according to the World Bank, is a supervisory approach that considers each of the risks that companies face and through a structured process, identifies the risks that are most critical to the financial viability of the institution.
Under the model, the supervisory on-site review process looks at the management of the key risk areas of a company and focuses attention on the critical net risk exposures.
NAICOM, said in introducing the model, which is expected to place Nigerian insurance industry on global best practices pedestal, it will ride on the van of Solvency 2 supervisory principle in regulating the activities of Nigerian insurance industry operators.
The Commission has been postponing the release of the blue print copy of the guideline but did that at the last insurers’ committee meeting in Lagos, the last held for the year.
Briefing the media on the outcome of the meeting, the vice Chairman, Sub-committee on Publicity and Communication of the Insurers Committee, Mrs. Ebelechukwu Nwachukwu said the RBS will properly kick off next year.
She said the industry is preparing to host a retreat on the RBS for the operators in November to educate members on the new supervision model.
Earlier, the Commissioner for Insurance, Mohammed Kari, had informed the insurers that the Risk base supervision model, would enable them undertake risks in line with their financial capability.
According to Kari, the exercise would lead to consolidation. He said not that consolidation is inevitable, stressing that there are many players in the industry who do not add value to the services they provide. He maintained that the exercise would change such attitude and position operators for effective operation.
“Consolidation does not mean just an additional capital. It could be redefining and identifying the type of insurance business you want to operate. For example, you do not have as much capital as company B, you would operate within the confines of your capital. Today, we have capital as the only bases for operation and if you meet the minimum capital, you can operate.
“Our legislation had structured the industry into life, general and miscellaneous. So, if you are licenced to do general, it means that with N3 billion you can attempt to insure petroleum refinery or you can claim the right to insure an Airline, which is not right if you look at the foundation of insurance.
“This is because, to be able to hold a risk, you must have enough asset base to cover the risk. So, risk base is being able to identify what is your financial capability. If you financial capability does not guarantee you to insure oil refinery or airline, you would not be allowed to do so.
“Your financial ability may be to insure a Keke NAPEP, then you would be a specialist in Keke NAPEP insurance. That is what risk based is going to be. It is going to first of all require that we review and see whether the minimum capital requirement is adequate. If it is not, we would require additional capital to meet that minimum. But if it is okay, we would just require the classification of companies’ assets plus the extra needed to get into the class of business one wants to undertake,” he said.
Also speaking on the project, the Head Corporate Affairs, National Insurance Commission (NAICOM) ‘Rasaaq ‘Salami; said the project would kickstart in first quarter 2017. He noted that by then, all necessary requirements to make the project successful would have been put in place.
Insurers have adopted the rebranding initiative as a vehicle to transform their business. They resolved to propel the multi-million rebranding campaign through radio and social media channels.
The insurers in embarking on the project said getting the youths to embrace insurance is the core mandate of the campaign, adding that operators hope to take the campaign to schools to educate the pupils on the need for insurance.
The insurers said they are eying the highly mobile individuals who need insurance to secure their future, adding the operators have also resolved to improve on their service delivery.