With the declaration of the Insurers Committee that the National Insurance Commission (NAICOM) is set to begin implementation of risk-based supervision in insurance industry, insurance operators said they are ready and awaiting the commencement of the new supervision model.
The operators, who spoke at the end of Insurers Committee organised in Lagos, noted that with the new supervision template, insurance companies will no longer operate a uniform capital base, but that their capital would be determined by the risk they undertake.
Moreover, the enforcement of 2009 Code of Corporate Governance is expected to commence on 1st of April, 2016. Speaking on this development, the Chairman, Sub- Committee on Publicity and Communication, Oye Hassan-Odukale, who is also the Managing Director of Leadway Assurance Plc, said insurance companies’ capital base will now be dependent on the value or specific area of risks they carry as a business, different from what obtains currently were all the companies have the same statutory level of capital either as general or life business.
The risk-based supervision roadmap, he said, will provide details on implementation plan, education and awareness, development, impact assessment, impact testing among other stages. According to him, “There will no longer be a common capital for insurance companies again. You will now determine your capital based on the kind of business you are doing. It will now be from the board level, as the board do some analysis and take decision on the risk appetite for their company, which will be appropriate for the kind of risk they carry.”
While stating that the Insurers Committee would ensure that the challenges facing the industry are addressed in the interest of all stakeholders, he added that, “We had the opportunity to listen to a presentation from a consumer perspective during the meeting today and what that has done for us is to see how we can improve on our services and relationship with the consumers.”
Speaking on regime of sanctions in the industry and how operators perceive it, Oye said: “You know, we have guidelines already, and not that the regulator just imposed the rate on us. Where the industry has major fines, the operators have been able to sit down with the regulators and it has been reduced. I am sure they have been reduced because i have had some cases. “So in any industry that is regulated, there are rules and when you break the rules, there are consequences and that is what is happening.
Therefore, i don’t see the insurance industry as being different from other industries.”
The Chairman, Sub-Committee, on Corporate Governance and Government Relations, who is the Managing Director of FBNInsurance, Mr. Val Ojumah, also speaking on the fines and how comfortable operators are, said: “You know we have a code of corporate governance and everybody understands the detail. So, if you break the law there are consequences and everybody understands the consequences.”
“I do not agree that the fines are too much. Just know that the industry is getting better by the day and everybody is trying to comply with the rules and regulations.”
Ojumah further stated that there will be errors made and there will be fines, so, what the regulator was trying to do was to ensure fairness.