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NAICOM aligns with global regulatory changes

By BusinessNews Staff on February 13, 2015

The National Insurance Commission (NAICOM) has said it has commenced actions to address identified gaps in Nigerian insurance industry in critical areas such as solvency framework, accounting and auditing practices.

Others are viability of insurance companies, enforcement of compulsory insurance, long term investment instruments for annuities, consumer protection and industry tax challenges.

The commission said this action was informed by on-going regulatory changes in the global insurance market, which is re-shaping the insurance industry and creating strategic and operational challenges and opportunities for insurers.
Director, Inspectorate Division of NAICOM, Mr Barineka Thompson, who disclosed this at a seminar organised by the commission in Benin City ,Edo State said the global financial crisis of 2008–09, coupled with the $184 billion US Government bailout of the insurance giant AIG, led to heightened calls to regulate the global insurance industry and the globe’s biggest banks.

He said the development had seen many countries strengthening their insurance market regulatory functions.
According to him, a country like India is shifting from a regime based on Solvency I to Solvency II.

America, the NAICOM director, added, was effecting significant reforms in its insurance market in the area of solvency, accounting, corporate governance, and consumer protection.

“The US is approaching its 2nd IMF assessment, exploring changes to its capital standards and group supervision options. Europe in January 1, 2016 is commencing the implementation of solvency 11 . Insurers are expected to meet all directive requirements, subject to application of transitional measures, and risk enforcement action in cases of breach” he said.

He further noted that in the Middle East ,changes are being made to align regulation with international practices., focus on local issues and Shari’a compliant insurance products such as Takaful.

Thompson said Africa was not left behind in the changes, observing that South Africa has continued to move forward with its Solvency Assessment and Management framework (SAM) to become effective 2016.

According to Barineka, in Nigeria, the pillars of the regulatory body’s changes are in areas such as deepening insurance penetration, strengthening insurance institutions through effective regulatory framework ,improving communication with all stakeholders to ensure transparency, public trust and confidence.

He listed other pillars of NAICOM’s changes as transforming the commission’s processes, people and systems, and optimising revenue collection and effective management of assets.

He said NAICOM’s regulatory and supervisory practices were subjected to an IMF/World FSAP review in 2013, adding that the commission’s initiative since then had been on-going transition to Risk-based Supervision.

Others are: enhancement of solvency management framework including consideration of Solvency II equivalence and early warning system. Review and consolidation of insurance laws, adoption of uniform financial reporting template for insurance reporting and consolidation of guidelines issued by the commission.

[ThisDay]

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