RBS implementation take offs December

Barring any last minute changes, the implementation of Risk Based Supervision (RBS) may commence in insurance industry latest by December this year, Business247 News Online has learnt.

Already, the National Insurance Commission (NAICOM) has come up with a draft to which the insurance operators are expected to make inputs in the next four weeks, after which the final copy of the new supervision template would be made public.

Briefing journalists at the end of the Insurers’ Committee Meeting in Lagos, the Head, Corporate Affairs, NAICOM, Mr. Rasaaq Salaami, said, the commission has intensified efforts to ensure that the new supervision template commences as soon as possible, noting that RBS will reposition insurance industry for the better.

According to him, “The commission has just circulated the draft roadmap for RBS and we expect that the industry will make their own input to the roadmap before the final copy is released and that would be after four weeks.”

To this end, he said insurance operators, under the auspices of the Nigerian Insurers Association (NIA), is having a retreat on RBS on 8th of November, this year, to further sensitise its members on what the new supervision template entails.

The Managing Director, Custodian & Allied Insurance Limited, Mr. Toye Odunsi, added that the retreat will be facilitated by a South African firm while at least three people from each insurance firm are expected to participate in the retreat that will educate and sensitise operators on how the new supervision framework works.

When RBS finally takes off, it will signal an end to the compliant-based supervision, currently in use.

This comes with its own sacrifice and cost, especially on the part of insurance operators who are expected to adhere to this new model. Apart from the fact that consolidation is imminent, there will also be an embargo placed on some illiquid firms to underwrite certain businesses.

The new supervision template would translates to business specialization where some underwriters are going to be restricted to a particular line of business because of their low capital base, while some insurers would be asked to upgrade their capital base, if they want to play in a particular market, such as; Aviation, Marine and Oil and Gas.

Hence, there is no longer uniform capital base among operators in insurance industry.

Speaking earlier on how RBS works, the Commissioner for Insurance, Mr. Mohammed Kari, said operators and regulator have their respective roles to play.

“Consolidation is inevitable. We have many players in the industry that do not add value to the services they provide, both in the intermediary and insurance sectors. Consolidation does not mean just an additional capital; it could be redefining and identifying the type of insurance business you want to operate,” he pointed out.