Insurance

NAICOM unveils 9-point agenda for 2017

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Chuks Udo Okonta

The National Insurance Commission (NAICOM) today unveiled nine-point agenda it considered as regulatory priorities for the Year 2017.

The priorities were highlighted in a circular signed by the Management, entitled: Statement of NAICOM’s regulatory priorities for the Year 2017, with reference number, NAICOM/CFI/NRP/CIR/01/2017, and sent to all Chief Executive Officers
and Boards of Insurance Institutions and the media.

According to NAICOM, top priorities to be pursued this year include: Market development; Capital verification; Management Expenses of Insurance Companies; Statutory Returns; Risk Based Supervision; Information Technology; Competence of Directors Senior Management and Persons in Control Functions; Corporate Governance and Service Delivery by the Commission.

It noted that the circular was issued to acquaint Insurance Institutions with the issues which will receive special regulatory attention in the year, adding that it will enable Insurance Institutions prepare for the changes that may be required; stressing that its issuance is without prejudice to right of the Commission to prioritize any issue it considers appropriate during the course of the year.

NAICOM posited that it will re-launch the Market Development and Restructuring Initiative (MDRI) with special and intensified implementation efforts on areas such as: Enforcement of Compulsory Insurance; Diversification of Distribution Channels; Increase in Access Points for Insurance Services; Micro Insurance; Takaful; Improvement in Data Collection and Promotion of Financial Literacy.

The regulators said to ensure protection of policyholders and beneficiaries of insurance contracts against unexpected losses of Insurance Companies, it will undertake a verification of the Capital resources of all Insurance Companies in the first quarter of 2017.

It said the level of expenses of some Insurance Institutions is becoming a cause for concern, hence, it will pay more detailed attention to reasonableness of management expenses to ensure that each Company’s level of expense is appropriate for its business model and does not adversely affect its profitability, liquidity and capital adequacy.

“A number of Companies submitted their statutory Returns for the year 2016 late. At the time of issuance of this statements some are yet to submit the required Returns and without explanation. This deprives the Commission, Policyholders, Insurance Intermediaries, Analysts and other Stakeholders of the relevant information about the performance and financial condition of the Companies, as well as the level of their compliance with relevant provisions of the law,” it said.

The Commission maintain Ed that it is poised to implement relevant measures to discourage Companies from filing late returns and sanction errant ones appropriately, stressing that amongst others, this will include a detailed review of their accounting and financial reporting systems, restriction of certain activities until relevant Returns are filed, action against officials accountable for financial reporting, as well as publicizing the compliance status of Insurance Institutions on our website for public guidance.

It posited that the final road map for the Industry’s transition to Risk Based Supervision (incorporating all the suggestions made by the Nigerian Insurers Association), will be issued by the end of January 2017.

“There is no doubt that the application of Information and Communication Technology (ICT) is a critical success factor in the running of any business today and the Insurance Industry continues to explore the benefits it offers. Information technology applications are catalyst to the development of any industry but not without its challenges, the most critical of which is security. The Commission is to establish the framework for Information technology supervision of insurance Institutions and promote arrangements for efficient and more cost effective applications in the Insurance Industry,” it said.

It said it is concerned about the performance of some Boards and Managements as reflected in their work not only from compliance perspective but also in terms of strategic and operational choices they make.

NAICOM added that its strategic approach to these challenges is to develop a mandatory competence profile for Directors and persons in Senior Management and Key functions in liaison with relevant organs of the industry whilst also considering a number of mandatory learning requirements/trainings for Directors, which shall commence in February, 2017.

“The importance of Corporate Governance in the management of Insurance Institutions cannot be over-emphasized. The Commission expects all Directors of Insurance Institutions to rise up to the challenge of not only ensuring that their Companies comply with relevant laws but also that their activities take into account the interest of all stakeholders especially Policyholders and providers of Capital,” it stated.

It posited that it will pay more attention to the behavioural aspects of Corporate Governance and extract accountability from relevant parties, especially Directors and members of Management, adding that Consequently, all Insurance Institutions are required to forward, to the Commission, planned schedule for their Board meetings for the year 2017 not later than February 10, 2017.

The regulator stated that in the course of the year 2016, it collated data on the service expectations of Operators in the Insurance Industry with a view to incorporating same in a service charter. It said this has been reviewed and it is being finalized into a draft document to be circulated for further inputs.

The Commission said it is going to leverage on information technology to improve its effectiveness and reduce the regulatory burden of manual operations on Insurance Institutions.

It urged the public and operators to forward all complaints about its service to her SERVICOM Unit for prompt attention.

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