NAICOM Urges Adoption Of Risk-Based Supervision, Risk-Based Capital For Financial Soundness And Stability Of Financial Institutions
The Commissioner for Insurance/Chief Executive Officer, National Insurance Commission (NAICOM), Mr Olusegun Omosehin, has called on operators in financial sector to adopt risk-based supervision and risk-based capital if they want to compete with their counterparts across the globe and remain relevant in the management of risks of their existing and potential customers.
Mr. Omosehin made the call today in his Keynote Address at the Chartered Insurance Institute of Nigeria’s year 2024 Professionals’ Forum held at Park-Inn Hotel Abeokuta, Ogun State, with the theme “The insurance Industry: Transformation Strategies towards Expanding Market Reach”.
Represented at the occasion by the Deputy Commissioner for Insurance, Finance and Administration, Mr Ekerette Ola Gam-Ikon, Omosehin emphasised the need for financial soundness and stability of financial institutions to hedge against impacts of negative events in the world.
He said “We are all aware that major events in the world such as the COVID19 pandemic, economic instability, climate change, rapid technological advancement, changing behaviour of consumers, crises across different parts of the globe, soaring inflation, instability in prices and many more have direct impact on global financial markets hence have now altered the way financial services are carried out.
“Financial soundness and stability of financial institutions have become more critical than we can ever imagine. Adoption of risk-based supervision and risk-based capital have become inevitable if we want to compete with our counterparts across the globe and remain relevant in the management of risks of our existing and potential customers.”
“Dear professionals, strong financial base is key to our success as an industry. As a Commission, we have resolved to pursue, as a priority, the safety and soundness of our regulated entities. Remember the words of Benjamin Franklin: “one rotten apple, spoils the barrel”. We are all witnesses to what this has caused us as an industry and are now more determined to rid ourselves of that cankerworm.
“Innovation and sustainability are some of the major emerging issues today. The insurance sector must embrace innovation to meet up with the rapid market changes, changes in consumers preference, tastes and lifestyle. We must develop products that meets the demands of our market as innovation have taken the driving force in the financial services sector. “
He stated that the Commission had, after issuance of the regulatory sandbox, which is intended to accommodate innovations, created a dedicated Innovation-Hub Unit targeted at addressing gaps in innovation regulation and market expansion.
He said if we must see the insurance industry of our dreams, meet the target of market expansion and growth, the industry must develop a wide range of new skill sets and orientation, attract and retain talents, diversify its products spectrum, improve its adaptability and agility, improve on transparency and openness, invest in technology, improve trust and confidence in insurance, have institutions that compete favourably with other sectors in terms of liquidity, capitalisation and expertise.
“While we are enthusiastic about opening up insurance market in the country and deepening penetration, I want to urge us to look inward and re-appraise our professional and business ethics and conduct. As professionals, we must conduct our business with utmost integrity and in manners that does not bring disrepute to the insurance profession.
“The Commission is prioritising issue of accessibility to insurance products across the country and is keen about increasing penetration. However, the conduct of insurance practitioners in building and maintaining trust of consumers is our primary responsibility, and that will galvanize growth and deepen penetration in the country.
“Every other strategy we discussed above depends solely on a strong corporate governance culture in our entities. The Commission will always emphasize the importance of strong Corporate Governance practices in the survival of business entities. The quality of the strategies and decisions made on behalf of those entities would determine how far they can go and how strategically positioned they will be in the sector’s contribution to national output,” he added.
While calling for stakeholders’ support he said, “Ladies and gentlemen, the cooperation and support of all stakeholders is equally an integral factor to the success of the transformation strategies to be adopted for the growth and development of the industry. The Commission is hereby enjoining all players, professionals, associations to come to the table, bringing our expertise, maximising our differences and building yet again a stronger and better insurance industry. The ability to stand united, focused and resilient will determine how far we can go”
