The National Insurance Commission (NAICOM) has reiterated its commitment to increasing the level of awareness of insurance operators in readiness for full scale smooth implementation of Risk Based Supervision (RBS).
Mahammed Kari, Deputy Commissioner Technical, NAICOM, disclosed this at a day seminar hosted by Munich Re Africa in Lagos, that the Commission was responsible for ensuring effective administration, supervision, regulation and control of insurance business in Nigeria even as provided in Part II, Section 6 of National Insurance Commission Act of 1997.
Kari, also said that arrangements have been concluded by the Commission for the adoption of RBS approach to the supervision of insurance and reinsurance Companies in Nigeria.
He said though the financial system in Nigeria is just evolving, “so too has the supervisory framework,” he added.
“We believe that a sound regulatory and supervisory system is necessary for maintaining a fair, safe and stable insurance sector for the benefit and or protection of the interests of stakeholders, as well as to promote stability of the financial system.
“In its earlier forms, supervisory approaches tended to be ‘compliance-based’, aimed mainly at ensuring compliance with the rules laid down for financial soundness and the conduct of business.
“The risks associated with compliance-based approaches are that they may lead to excessive focus on observed non-compliance and to insufficient understanding of key business drivers and flaws in risk management practices of insurers.
“However an element of compliance monitoring is necessary in any supervisory approach to ensure that essential minimum standards are met and that the overall regulatory and supervisory regime has credibility,” he said.
He urged operators not to see the RBS as the regulator trying to introduce or push a new concept down their throats, but as an opportunity to imbibe the culture of risk based management.