By Adedapo Adesanya
The boards of insurance companies operating in the country have been charged by the National Insurance Commission (NAICOM) to embrace the measures put in place to tackle the challenges of unpaid claims.
The Commissioner for Insurance, Mr Sunday Thomas, expressed worry over the number of outstanding claims in the sector despite efforts by the regulator to address the issue.
Mr Thomas, who is also the chief executive of NAICOM, said the organisation, in collaboration with members of the Insurers’ Committee, has taken decisions and incepted measures designed to tame the menace of unpaid claims.
Speaking at the 2023 Insurance Directors’ Conference organised by the College of Insurance and Financial Management (CIFM) in Lagos themed The Board and Insurance Business Sustainability, he called on “members of the boards of insurance institutions to support these measures by putting in place policies designed to tackle the menace.”
“The commission will not hesitate to consider other regulatory measures to address the menace,” he added.
Mr Thomas highlighted some of the high-level issues observed by the commission during its just concluded fourth batch of the onsite examination of some insurance institutions, using the risk-based supervision methodology.
The commissioner stated that NAICOM observed that some insurance firms embarked on inadequate policies and procedural manuals, and in some cases, non-adherence to these policies where they existed.
He said some policies did not reflect the specific requirements of extant regulations such as the Prudential Guidelines and Market Conduct Guidelines, among others.
According to him, there is a need for directors to improve their understanding of the requirements of AML/CFT particularly, the recently introduced requirements regarding proliferation financing in the AML/CFT/CPF regulations 2022.
“Also, inadequate risk profiling methodologies and practices, absence of policies to protect Chief Compliance Officers and Chief Risk Officers from intimidation and victimisation.
Inadequate board compliance policies result in companies breaching extant laws and regulations with no consequential action by the board.
“Inadequate focus of boards on risks inherent in the core or significant activities of insurance companies such as underwriting, reinsurance, claims, investment and information technology, among others.
“Under-trading as the ratio of capital to a premium of most companies are below the standard threshold.”
According to the commissioner, these issues require urgent attention of the boards by way of adequate policies to ensure proper guidance to ensure the sustainability of insurance institutions.
Mr Thomas noted that companies went under due to the inactions of people noting that most of the issues that led to the collapse of companies resulted from governance challenges.
He said that NAICOM recently had to penalise some companies that had utilised unlicensed intermediaries in blatant breach of the Insurance Act 2003.
The commissioner stated that in recognition of the increasingly complex business environment, the commission had resolved to facilitate innovation and sustainability of the industry.
Mr Thomas hinted that NAICOM had heightened its supervision and now focused on resolving broader policy challenges such as sustainability, climate risk and digitalisation, among others.
He said this would be done through regulatory policy initiatives that could facilitate the offer of an essential range and variety of products and services that supported the Sustainable Developmental Goals (SDGs).
