NAICOM Warns Insurers Against Keeping Recapitalised Funds Idle
The National Insurance Commission (NAICOM) has urged insurance companies to deploy their recapitalised funds effectively to strengthen operations, improve claims settlement and deepen insurance penetration.
Mr Olusegun Omosehin, Commissioner for Insurance and Chief Executive Officer of NAICOM, made the call at the 11th Annual Conference of the Nigerian Association of Insurance and Pension Editors (NAIPE) on Thursday evening.
The conference which held in Lagos had the theme: “Post-Recapitalisation Market Dynamics in Insurance and Pension Sectors”.
Omosehin said recapitalisation would only achieve its objectives if insurers deployed the additional capital to create sustainable value, strengthen institutions and improve policyholders’ protection.
“Capital should not remain idle on the balance sheet. We want that capital to work for the industry,” he said.
He urged insurers to align their capital with business strategies, solvency requirements and capacity to underwrite risks.
He stressed the need for effective asset and liability management to ensure that insurance liabilities were matched with liquid, appropriate and diversified assets.
He advised operators to adopt prudent investment policies focusing on capital preservation, liquidity, portfolio diversification, regulatory compliance and sustainable returns.
Omosehin recalled that the capital market downturn following the 2007 recapitalisation adversely affected some insurance companies, while others survived through prudent investment strategies.
The commissioner said NAICOM would intensify risk-based supervision as the industry moved towards implementing risk-based capital requirements.
He urged insurers to strengthen enterprise risk management and invest in risk analytics, actuarial capabilities and stress-testing mechanisms.
He described claims management and policyholders’ protection as critical priorities in the post-recapitalisation era.
“No matter the amount of capital you raise, if you are unable to translate this to effective claims settlement and let the policyholder enjoy it, it will be classified as just an exercise,” he said.
He also urged insurance correspondents and other stakeholders to promote accurate reporting to improve public understanding and confidence in the sector.
Earlier, Dr Odiri Ogini, Chief Executive Officer of United Capital Asset Management, explained the benefits of boosting capital base.
He said the enhanced capital base would enable insurers to underwrite larger risks in maritime, oil and gas and other major transactions previously ceded abroad.
Ogini, represented by Mr Ayodele Akinwunmi, Chief Financial Officer of United Capital, cautioned insurers against deploying additional capital carelessly in pursuit of returns.
He urged operators to invest in instruments capable of generating sustainable returns while maintaining sufficient funds to settle claims.
Ogini identified telecommunications, agriculture, oil and gas, solid minerals, logistics, housing, automobile manufacturing and infrastructure as sectors offering significant opportunities for insurance underwriting and investment.
He said the expansion of telecommunications, including 5G technology, presented opportunities for innovative insurance products covering emerging risks.
He also identified agriculture, offshore operations and solid minerals as sectors requiring adequate insurance capacity to attract investments and support economic growth.
Ogini urged insurers and pension funds to invest more in infrastructure and other critical sectors to support national development.
He described real estate as an investment opportunity that could generate returns while creating demand for mortgage and property-related insurance products.
He also called for innovative products to protect property owners against risks, including rental-income losses.
Also speaking, Mr Oguche Aguda, Managing Partner of HRISP Partners, urged pension fund operators to focus on scale, technology, compliance, talent and stakeholder engagement beyond recapitalisation.
Aguda said recapitalisation was only one component of the reforms required to strengthen the pension industry and position it for future growth.
He said adequate capital and economies of scale would help operators support Nigeria’s aspiration of becoming a trillion-dollar economy.
According to him, recapitalisation helps consolidate the industry, strengthen operators’ capacity to absorb losses, boost public confidence and prepare the sector for greater economic activity.
“Recapitalisation is just one piece of the puzzle. It is not just about capital,” he said.
Aguda urged pension operators to improve efficiency, strengthen compliance and regulatory engagement, develop competitive advantages and invest in technology.
He said operators combining adequate capital with strong leadership, skilled personnel and effective stakeholder engagement would be better positioned to succeed in the post-recapitalisation era.
He added that technology should become an organisation-wide priority rather than the sole responsibility of information technology departments. #NAICOM Warns Insurers Against Keeping Recapitalised Funds Idle# NAICOM Unveils ISSP to Advance Insurance Penetration
