Amaka Obiefuna.

A circular being sent out by the National Insurance Commission, NAICOM has revealed that the agency is planning a verification of capital resources of insurance companies in the country by the first quarter of the year. The circular titled: “statement of NAICOM’s regulatory priorities for 2017” and dated 23rd January, 2017, was send to Chief Executive Officers and Board of Insurance Institutions in the country.

The circular says in part that “all professionals that participate in the financial reporting chain are expected to ensure their duties in the valuation of assets and liabilities and issuance of opinion on financial report are discharged creditably in accordance with relevant laws and professional standards.” The cost of the verification exercise will be borne by insurance companies, other modalities shall be communicated in due course, the circular says.
The circular contains other issues such as: Market development; 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.
Another part reads: “The Commission will re-launch the Market Development and Restructuring Initiative (MDRI) with special and intensified implementation efforts on the following areas: Enforcement of Compulsory Insurance; Diversification of Distribution Channels; Increase in Access Points for Insurance Services; Micro Insurance; Takaful; Improvement in Data Collection and Promotion of Financial Literacy. The Commission hereby invites suggestions on the above items as well as the relevant elements of the National Financial Inclusion Strategy which is due for review in 2017.  Such suggestions should reach the Commission not later than February 17, 2017.”

” The level of expenses of some Insurance Institutions is becoming a cause for concern. In this regard, the Commission 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.
“The Commission will expect each Board to take definite steps to ensure reasonableness
of its Company’s expenses by ensuring that they are incurred wholly and necessarily for
the purpose of the business. Evidence of action in this regard should feature in the
minutes of board meetings.”
“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.
On Risk based supervision the commission it says:” 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. As indicated in the draft exposed last year, 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.