…set to issue roadmap on Risk-based Supervision
The National Insurance Commission (NAICOM) has frowned at the rate at which Insurance companies in the country submit their statutory returns late to the regulatory authority, saying that henceforth, the development will be met with stiffer sanctions.

In a circular with reference NAICOM/CFI/NRP/CIR/01/2017 dated January 23 2017 and directed to all Chief Executive Officers and Boards of Insurance companies in the country, and made available to Economic Confidential in Abuja, the regulator said a number of companies submitted their statutory returns for the year 2016 late, adding that as at the time of pushing out this statement, some are yet to submit the required returns and without explanation.
This, according to NAICOM, ‘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”.
The circular noted that the commission is poised to implement relevant measures to discourage companies from filing late returns and sanction errant ones appropriately.

The impending sanctions 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 the commission’s website for public guidance.

The circular further noted that the Boards of companies are expected to take interest in the timely filing of returns, which incidentally, contain information they need to effectively perform their oversight function, stressing that non-rendition of returns is therefore an indication of the failure of the Board.

The Commission further hinted that in order to facilitate the timely rendition of returns, it will carry out a review of the current returns requirements and streamline them for more efficiency in preparation and submission, adding that the transition to electronic submission will commence this year.

Meanwhile, the Commission has prepared the final roadmap for transition to risk-based supervision in the insurance industry, which also incorporated all suggestions made by the Nigerian Insurers Association and will be released by the end of January 2017.

It said that following the exposed draft last year to stakeholders, the commission already has components of a risk-based solvency regime in place which will only be improved upon in the light of changes made in regulatory standards after they had been introduced and the operating context of the Nigerian Insurance industry.
While acknowledging the fact that time will be required to install a full-fledged risk based solvency regime for the industry, the reality does not preclude the operators from paying attention to the risk to which they are exposed to, as a result of their underwriting, operational choices, and relevant drivers in the business environment.

It noted that some Boards of Directors do not give adequate attention to the risk exposure of their business and the adequacy of their capital, calling on the Boards not to see risks and solvency management as just an issue for compliance but as a practice worth imbibing by prudent and effective insurance institutions.
On the commission’s part, appropriate measures and tools are to be deployed to ensure that companies that pose greater risk to the attainment of its regulatory objective receive more proactive and intense supervision, while Boards will be expected to consider the risk register and solvency condition of their companies during their quarterly board meetings.

In view of this development, NAICOM said with effect from 2017, the regulator expects each company to send in report on Board’s assessment of their risk and solvency quarterly, as well as annual report on own Risk and Solvency Assessment (ORSA), adding that all companies are required to have their appointed Actuaries issue a Financial Condition Report(FCR) of their companies as at 31st December 2016, not later than March 31st, 2017.