Thursday, March 3, 2016 10:34 pm
The National Insurance Commission, NAICOM has informed Nigerian Insurance Companies that it would begin the enforcement of the corporate governance code which was introduced in 2009. Since the introduction of the code, NAICOM has not been firm on it. The code’s enforcement would begin on 1 April, 2016.
This follows NAICOM’s announcement that underwriting firms in the insurance industry will no longer have a uniform capital base. NAICOM has ordered operators to recapitalize according to the risks they undertake.
General Insurance Firms are now to recapitalize to the tune of N3 billion, while Life Insurance Companies must have a capital base of N2 billion. Composite Insurance Firms have also been directed to raise their capital base to N5 billion.
NAICOM was said to have reached the decision on recapitalization due to the rising value of insurance risks, courtesy of the current financial crisis that has affected all sectors of the economy. The move was also made to ensure appropriate implementation of risk-based supervision in the industry.
Operators in the insurance industry have reached an agreement with NAICOM to transit to risk based supervision to enable operators up their capital according to their segment of the insurance business. Risk based supervision will entail supervisors reviewing how insurers identify and control risks. The supervisors will also assess system and individual firm risks, and intervene according to the assessment made. Through this process, supervisors allocate resources to insurers with the greatest risk.
According to Oye Hassan Odukale, Managing Director of Leadway Assurance Plc, the board of insurance firms are now to determine the risk capital for their companies, which would be supported by the appropriate capital. He refers to this as a new concept in the Insurance industry.
‘’We are transiting to this new initiative and NAICOM is taking us through it so that we can move our capital structure to this base,” Odukale said.