The National Insurance Commission (NAICOM) has advised insurance companies to strengthen corporate governance, risk management and policyholder protection to sustain the gains of the recently concluded recapitalisation exercise.
The Commissioner for Insurance, Mr Olusegun Omosehin, gave the advice at the 8th Annual Insurance Directors’ Conference in Lagos on Thursday.
He said this was important as the industry enters the Risk-Based Capital (RBC) era.
The conference, organised by the College of Insurance and Financial Management in collaboration with NAICOM, has the theme: “Recapitalisation to Resilience: Leading the Risk-Based Capital Era”.
Omosehin said the successful recapitalisation of the industry marked the beginning of a more demanding phase requiring insurance companies to translate their stronger capital positions into sustainable growth and improved service delivery.
He said, “Recapitalisation was never the destination; it is the gateway to a more demanding phase, a phase that will be defined not by the size of capital alone, but by how that capital is governed, protected, deployed and aligned with risk.
“The relationship between insurance and economic development must become more deliberate.
“The insurance industry must demonstrate greater willingness to support productive economic activities, develop innovative products, improve service delivery and build public confidence through prompt and fair claims settlement.
“I therefore challenge insurance institutions to translate their strengthened capital positions into greater economic relevance.
“We must build an industry that is not only financially stronger but also more visible, accessible and impactful in the lives of Nigerians.”
The commissioner explained that a strong capital base alone could not guarantee institutional resilience.
He noted that poor governance, weak internal controls, inappropriate investments and ineffective risk management could undermine even well-capitalised institutions.
He, however, urged directors to take greater responsibility for strategic leadership, capital management, risk governance and accountability of executive management.
According to him, boards must ensure that business expansion and growth ambitions are consistent with companies’ capital positions, operational capabilities and risk appetite.
Omosehin also called for stronger oversight of underwriting practices, reinsurance arrangements, investment exposures, liquidity and technology-related risks.
He said internal audit, compliance, risk management and actuarial functions must be adequately resourced and empowered to discharge their responsibilities independently.
“Board membership is not an honorary appointment. It is a position of trust that carries significant fiduciary, professional and regulatory obligations,” he said.
The commissioner cautioned against allowing shareholders’ expectations for returns to undermine board independence or encourage unsustainable business strategies.
He said the interests of shareholders must be balanced with the obligations of insurance companies to policyholders, creditors, employees, regulators and the wider public.
On the transition to the Risk-Based Capital regime, Omosehin explained that the Minimum Capital Requirement (MCR) established the minimum capital threshold for licensed insurance operations, while RBC assessed capital adequacy in relation to the risks undertaken by each institution.
He said an insurance company could meet the minimum capital requirement but still have inadequate capital to support the nature, scale and complexity of its risk exposures.
The commissioner said NAICOM’s supervisory approach would increasingly focus on capital quality, risk management frameworks, governance effectiveness and the ability of companies to meet policyholder obligations.
He noted that the commission would place greater emphasis on accurate regulatory returns, financial reporting, actuarial assessments and timely disclosure of material developments.
“Successful recapitalisation does not confer permanent immunity from regulatory scrutiny. Capital adequacy is a continuous responsibility,” he said.
Omosehin said the strengthened insurance industry had significant potential to support Nigeria’s economic development, particularly in infrastructure, energy, manufacturing, agriculture and construction.
He said increased financial capacity could also deepen domestic risk retention, reduce dependence on foreign insurance markets and position insurers as significant sources of long-term investment.
The commissioner, however, emphasised that the benefits would depend on the industry’s ability to develop innovative products, improve service delivery and strengthen public confidence through prompt and fair claims settlement.
He urged boards to make policyholder protection central to their institutional strategies, noting that the public judged insurance companies largely by their willingness and ability to honour claims.
Omosehin also emphasised the importance of complying with the “Fit and Proper Framework” in appointing directors, chief executives and key management personnel.
He said appointments should be based on competence, character, experience and professional integrity, rather than on status, influence or personal relationships.
The commissioner urged directors to ensure their institutions emerged from the recapitalisation exercise not only financially stronger, but also more competitive, resilient and relevant to national development.
He challenged them to ensure that the industry’s increased capital translated into improved underwriting capacity, better claims settlement and greater public confidence.
