CIIN instigates insurance growth on the back of Risk Based Supervision

Insurance practitioners in the country have been challenged to take advantage of opportunities inherent the industry’s regulatory frameworks to grow the industry to its desired height considering the stabilization roles which insurance plays in global economies.

Head of Technical services at Royal Exchange General Insurance Company Dr Mrs Joyce Odiachi who threw the challenged said that the insurance industry’s adoption of Risk Based Supervision (RBS) model presents enormous opportunities for companies to self regulate their operations and growth trajectory without undue pressure from the industry’s regulators. It was against this backdrop that Dr Odiachi advised insurance companies not to see the RBS model as a form of confrontational instrument between the industry’s supervisor; the National Insurance Commission (NAICOM) and industry operators.

Joyce Odiachi who spoke as a discussant at an industry parley organized in Lagos by the Chartered Insurance Institute of Nigeria (CIIN) explained that “this Risk Based Supervision model should not be seen as we versus them. It should rather be seen as a strategy geared towards self regulation as companies are now allowed to determine where they want to play and not necessarily waiting on NAICOM to prescribe conditions and levels of operation for them”.

Risk Based Supervision model is known to play crucial role when measuring the financial strength and stability of insurance companies. It is a regulatory framework that helps insurance regulator to assess the solvency and financial stability on insurance companies. It serves as a valuable to in monitoring and assessing the financial health of companies as well as the effectiveness of governance and risk exposures of insurers. It allows for the use of early warning system to monitor the health of insurance institutions.

Earlier in her presentation, the lead speaker at the one day event which had as theme; “Risk Based Supervision: paving the way for a stable and innovative Nigerian insurance industry” Mrs Olufunke Adenusi had applauded the RBS model saying that its implementation will ensure that insurance companies have the necessary financial strength to meet their obligations even in the face of unexpected challenges.

“Risk Based Supervision plays a pivotal role in assessing the governance, solvency and financial stability of insurance companies. By providing  a standardized measurement system, considering various risk factors, acting as an early warning system, bolstering market confidence, and facilitating comparative analysis, RBS helps regulator protect policyholders and maintain a robust insurance industry” Mrs Adenusi who is the Managing Director and Chief Executive Officer of Colximate Insurance Brokers Limited submitted.

She had gone further to identify the expected roles of insurance industry operators under the RBS model when she stated that companies are to determine their capital requirements on a risk assessment basis, prepare their own risk solvency assessment report as to take ownership for identifying, assessing, monitoring and managing both short and long term risks as well as to determine their own funds necessary to ensure its overall solvency needs are met at all times. Under the system companies are been encouraged to collaborate with peers and the regulator.

Speaking on strategies for facilitating insurance companies’ readiness for RBS, the guest speaker contended that the structure of the supervisory agency must allow for what she described as high level consistency in application of the risk assessment principles. She observed that risk assessment and control quality are both subjective to personal risks. She tasked the supervisor on the areas of training and guidance, risk rating model as well as measurement tools.

One of the discussants at the panel session who is the  Managing Director and Chief Executive Officer of Heirs General Insurance Mr Oluwole Fayemi had called on insurance practitioners to walk away from the old order as to create  new strategies for growing the business.

According to him, statistics and data should be the guiding light saying that “your risk appetite and  your expertise should moderate your activities”.

President and chairman in council of the CIIN Mr Edwin Igbiti had while appreciating participants at the parley advised them to be more committed in ways that will lead to the expansion of the nation’s insurance industry saying that the economy will not be able to gain the desired traction without the backing of a stable and reliable insurance industry.

Mr Igbiti submitted that in an era marked by rapid technological advancements, evolving customer expectations, and complex global challenges, insurance industry stands at a pivotal crossroads.

“We are not merely responding to change; we are driving it. Today’s parley is an opportunity to reflect on our progress, share insights, and chart a course for a future that balances innovation with the fundamental principles of trust and security that define our profession,” he posited.

He noted that as practitioners pave the way for a stable and innovative future, it is imperative that they embrace and implement robust risk-based supervision practices to ensure the industry’s resilience and growth.

The CIIN President maintained that with the dynamic nature of the insurance landscape and the evolving risk environment, traditional, one-size-fits-all supervision approaches may no longer suffice, submitting that risk-based supervision offers a tailored and proactive framework that enables regulatory authorities to identify, assess, monitor, and mitigate risks effectively.

He commended the efforts of NAICOM towards expanding the frontiers of the insurance market. Mr Igbiti pledged to support of the CIIN and by extension, that of the insurance practitioners towards ensuring a more vibrant insurance industry.

The panel discussion session of the 2024 CIIN parley was moderated by Mrs. Olufunmilayo Ogunbiyi who is Head, Technical Operations, Stanbic IBTC Insurance Limited.