NAICOM to Drive Nigeria’s Insurance Sector Growth Via Risk-Based Capital
National Insurance Commission (NAICOM) has expressed its commitment to drive Nigeria’s insurance sector growth through Risk-Based Capital (RBC) requirements.
This commitment is made in line with NAICOM’s vision to maintain a safe and sound insurance industry, competing globally and contributing optimally to the economic growth and development of Nigeria.
Risk-Based Capital (RBC) requirements are developed to determine the minimum amount of capital required of an insurer to support its operations and write coverage.
Thomas Olorundare Sunday, Commissioner for Insurance/CEO National Insurance Commission (NAICOM) said “The current Risk-Based Supervision environment will be taken to new level which is Risk-Based Capital (RBC),”
Commissioner for NAICOM made this known at a breakfast meeting with editors in Lagos, adding that there will be no push-back against the Risk-Based Capital regime.
He said “One-size-fits-all will no longer be operational. By the end of 2023, we will ensure Risk-Based Capital is operational.”
In a Risk-Based Capital (RBC) regime, the insurer’s risk profile (that is the amount and classes of business it writes) is used to determine its risk-based capital requirement. Majorly, four categories of risk are analyzed in arriving at an insurer’s minimum capital requirement: asset, credit, underwriting, and off-balance-sheet.
However, as Nigeria’s economy grows, NAICOM’s goal is to ensure safety and soundness of insurance institutions, stability of insurance sector, protection of policyholders and third parties covered by insurance contracts, optimal development of the Nigerian insurance market, public trust and confidence in the insurance system, and effectiveness in use of resources and compliance with relevant laws.
The NAICOM boss also reiterated the commission’s commitment to good corporate governance by insurance sector operators as the drive for financial inclusion and product penetration continues.
The total assets of the country’s insurance industry increased to N2.5 trillion in 2022 as against N1.3trillion in 2018. The Commission has set target on a N1trillion gross premium income (GPI) for the insurance industry after it increased to circa N730billion in 2022.
Sunday highlighted that NAICOM is leveraging the instrumentality of Nigeria’s states on compulsory insurance such as motor insurance, etc.
The National Insurance Commission (NAICOM) was established in 1997 by the National Insurance Commission Act 1997 with responsibility for ensuring the effective administration, supervision, regulation and control of insurance business in Nigeria and protection of insurance policyholders, beneficiaries and third parties to insurance contracts.
