NAICOM To Enforce Corporate Governance, Commence Risk Based Supervision

The insurance industry regulatory authority, National Insurance Commission (NAICOM) will commence the implementation and enforcement of the Corporate Governance Code as from April 1, 2016. The corporate governance code was introduced in the insurance industry since 2009 but has not been strictly enforced.

The commencement of the enforcement of the code is therefore seen as a major step by the Commission towards full implementation of its Risk Based Supervision (RBS), a globally accepted supervisory model that will launch Nigerian insurance industry into the main stream of global best practice standard.

NAICOM disclosed plans to enforce the corporate governance code and implementation of risk based supervision at the weekend at the second edition of the Insurers’ Committee meeting in Lagos.

The meeting is similar to the regular Bankers’ Committee meeting and it is attended by operators and NAICOM officials.

Briefing the media at the end of the meeting, Chairman, Publicity and Communication Sub-Committee, Mr. Oye Hassan-Odukale said the commission has intimated them with the plan to com- mence implementation and enforcement of the corporate governance code.

Hassan-Odukale, who is also the Managing Director of Leadway Assurance Plc, explained that the code was introduced by the commission since 2009 but that due to some reasons, the commission has not been too firm in its implementation.

“We had old corporate governance code which was introduced by NAICOM in 2009, but for some reasons, they have not been too firm on it but we are told that from April 1, NAICOM is going to enforce it. There are some other codes like the one of last year but NAICOM has agreed that since the Financial Reporting Council (FRC) is coming up with a new code, they will just allow FRC code when it comes out to supersede the present code. So we are given up to April to comply with the 2009 corporate governance code,” he stated.

He said the Committee, which plans to hold similar meetings regularly with the next edition coming up in April, will use the meeting as an avenue for NAICOM and operators to address some issues and challenges confronting the operators.

On the RBS model, he said, operators and the commission have agreed to transit to RBS model, adding that it will enable

operators shore up their capital in line with the businesses they want to underwrite.

“We had a lecture from NAICOM on RBS, which is where we are transiting to. With RBS, there would not be common capital base for insurance companies again. Companies have to determine their capital in line with the business they do. The board of insurance companies would have the responsibility of determining the risk capital for their companies which would be supported by the appropriate capital. This is new in Nigeria. Just like the International Financial Reporting Standard (IFRS), we are transiting to this new initiative and NAICOM is taking us through it so that we can move our capital structure to this base,” he said.

Also speaking on the implementation of the RBS, the Deputy Commissioner for Insurance Finance and Administration, Mr. George Onekhena said some work has already been done.