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RBS implementation may take off in December


There are strong indications that
the implementation of Risk
Based Supervision (RBS) may
commence in insurance industry before
or in December, Financial Mirror’s findings
indicated.

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 at the
weekend, the Head, Corporate Affairs, NAICOM,
Mr. Rasaq Salaami, said that the commission
had 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 it expects that the industry players will
make their own input to the roadmap before
the final copy is released and that would be
after four weeks.

He said insurance operators, under
the auspices of the Nigerian Insurers
Association(NIA), would hold a retreat on
RBS next month to further sensitise its members
on what the new supervision template
entails.

The Managing Director, Custodian & Allied
Insurance Limited, Mr. Toye Odunsi,
clarified further 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.
Industry analysts believe that when RBS
finally takes off, it will signal an end to the
compliant-based supervision currently being
used for the industry.

However, the new policy initiative 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 means just an additional
capital; it could be redefining and identifying
the type of insurance business you want to
operate,” he said.

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