NAICOM Issues 3 New Guidelines To boost Professional Business Conduct
The National Insurance Commission (NAICOM) has issued three new guidelines to boost professional business conduct in the Nigerian insurance industry.
The guidelines include Insurance Regulatory Sandbox Operational Guidelines, Market Conduct Guidelines for Takaful and Retakaful Insurance Operators and Enterprise Risk Management Framework for Takaful and Retakaful Operators in Nigeria.
NAICOM, in a statement today signed by Rasaaq Salami, Head, Corporate Communication and Market Development for the Commissioner for Insurance, Mr. Olorundare Sunday Thomas, stated that the guidelines are part of its strategic objective to drive innovation of products and services, ensure operators are professional in the conduct of their businesses in line with best practices. The Commission recently issued the following guidelines:
According to the statement, the Commission expects all operators to ensure compliance with the new guidelines to the benefit of all stakeholders.
The new guidelines take effect from May 1, 2023.
According to NAICOM, these Guidelines are issued in exercise of the powers conferred on the National Insurance Commission (hereinafter referred to as the Commission) under the National Insurance Commission Act 1997 and the Insurance Act 2003.
These Guidelines shall be read in conjunction with the provisions of the Insurance Act as well as other regulations, notices and circulars that the Commission may issue from time to time.
Insurance Regulatory Sandbox Operational Guidelines is to provide insurance institutions, other firms and persons the opportunity to test business models, products and services that will enhance efficiency in meeting consumers’ needs.
Other are to encourage innovation that will drive financial inclusion and positive competition and to promote and deliver economic benefits, by lowering the cost of business operations.
The Regulatory sandbox refers to a consciously established relaxed regulatory environment for the testing of innovative products, services, business models, channels of distribution subject to regulatory discretions and set parameters that have potential of improving insurance inclusiveness and service efficiency in Nigeria.
The possible areas of innovation that will be allowed into the Regulatory Sandbox are insurance solicitation or distribution, insurance products, underwriting, policy and claims servicing and any other activity within the insurance value chain
The Market Conduct Guidelines For Takaful & Retakaful Insurance Operators are issued in exercise of the powers conferred on the National Insurance Commission (the Commission) and shall apply to all Takaful Insurance Institutions in Nigeria effective 1st May 2023.
The Guidelines shall form part of the regulatory and supervisory tools for Takaful insurance institutions and shall be read in conjunction with other extant provisions, notices, circulars that the Commission had issued or may issue from time to time.
Takaful insurance operators are required to formally direct their staff, agents and other business associates or partners to comply and ensure strict compliance with these Guidelines.
Takaful insurance operators shall establish internal policies and procedures to give effect to the provisions of these Guidelines and shall form part of its internal control.
The main objectives of this Guidelines are to set out minimum standards required from Takaful insurance operators in their dealings with participants/policyholders, shareholders and other stakeholders; promote greater fairness and transparency between participants/policyholders and Takaful insurance operators.
Others are to establish strong market conduct and business practice amongst the practitioners/stakeholders and enhance mutual confidence for market efficiency; set out the general licensing and authorization requirements for Takaful insurance operators and intermediaries; state the responsibility of Takaful insurance operators in ensuring that their activities are properly coordinated and carried out in a professional manner; provide principles to ensure that customers are treated fairly, prior to the inception and discharge of the contract; provide the board of directors and management of Takaful insurance operators with a framework for the establishment of policies and procedures for effective Takaful operations.
The Enterprise Risk Management Framework For Takaful and Retakaful Operator in Nigeria is intended to establish minimum Risk Management Standards for Takaful Insurance Operators (TIOs) in Nigeria.
This guideline discusses how management of risks inherent in the TIO shall be implemented as a TIO is exposed to risks that may affect its ability to achieve its objectives or even its continuing existence.
This Guideline has been designed to articulate principles that may be applied to a variety of circumstances, and does not prescribe specific quantitative standards. This is for practical reasons; differences in the environments in which different TIOs Operate, as well as differences in their Operational Frameworks, mean that a detailed prescription that might be calibrated to suit one entity would not necessarily be suitable for others.
The principles and recommendations set forth in this Guideline are intended to achieve the following main objectives: to help understand the risks to which a Takaful Undertaking is exposed; to provide minimum standards for the development of a risk management framework for ease of management of the Takaful undertaking and supervision by its governing bodies and supervisory authorities and to help create a safe and prudent environment for the growth, sustainability and development of the Takaful industry.
This Guideline is applicable to all Takaful undertaking. Reference to Takaful insurance undertakings also refers to Retakaful Undertakings.
