The National Insurance Commission (NAICOM) has released its operational guidelines for this year entitled “regulatory priorities for the Year 2017.”
The guidelines were contained in a circular signed by the management, entitled: Statement of NAICOM’s regulatory priorities for the Year 2017, with reference number, NAICOM/CFI/NRP/CIR/01/2017, and sent to all Chief Executive Officers and Boards of Insurance Institutions and the media.
According to NAICOM, top priorities to be pursued this year include: Market development; Capital verification; Management expenses of insurance companies; Statutory returns; Risk based supervision; Information technology; Competence of directors, senior management and persons in control functions; corporate governance and service delivery by the commission.
The commission noted that the circular was issued to acquaint insurance institutions with the issues which will receive special regulatory attention in the year, adding that it will enable insurance institutions prepare for the changes that may be required.
It stressed that its issuance is without prejudice to right of the commission to prioritize any issue it considers appropriate during the course of the year.
NAICOM stated that it will re-launch the Market Development and Restructuring Initiative (MDRI) with special and intensified implementation efforts on areas such as: enforcement of compulsory insurance; diversification of distribution channels; increase in access points for insurance services; micro insurance; improvement in data collection and promotion of financial literacy.
The regulators said to ensure protection of policyholders and beneficiaries of insurance contracts against unexpected losses of Insurance Companies, it will undertake a verification of the Capital resources of all Insurance Companies in the first quarter of 2017.
NAICOM said the level of expenses of some insurance institutions is becoming a cause for concern, hence, it will pay more detailed attention to reasonableness of management expenses to ensure that each company’s level of expense is appropriate for its business model and does not adversely affect its profitability, liquidity and capital adequacy.
“A number of companies submitted their statutory returns for the year 2016 late. At the time of issuance of this statements some are yet to submit the required returns and without explanation. This deprives the commission, policyholders, insurance intermediaries, analysts and other stakeholders of the relevant information about the performance and financial condition of the companies, as well as the level of their compliance with relevant provisions of the law,” it stated.
The commission maintained that it is poised to implement relevant measures to discourage companies from filing late returns and sanction errant ones appropriately, stressing that amongst others, this will include a detailed review of their accounting and financial reporting systems, restriction of certain activities until relevant Returns are filed, action against officials accountable for financial reporting, as well as publicizing the compliance status of Insurance Institutions on our website for public guidance.
It posited that the final road map for the Industry’s transition to Risk Based Supervision (incorporating all the suggestions made by the Nigerian Insurers Association), will be issued by the end of January 2017.
“There is no doubt that the application of Information and Communication Technology (ICT) is a critical success factor in the running of any business today and the Insurance Industry continues to explore the benefits it offers. Information technology applications are catalyst to the development of any industry but not without its challenges, the most critical of which is security. The Commission is to establish the framework for Information technology supervision of insurance Institutions and promote arrangements for efficient and more cost effective applications in the Insurance Industry,” it said.
It said it is concerned about the performance of some Boards and Managements as reflected in their work not only from compliance perspective but also in terms of strategic and operational choices they make.