Barbara Bako, Abuja.
The National Insurance Commission (NAICOM) has warned insurance companies against complacency following the conclusion of the industry’s recapitalisation exercise, urging boards and management to strengthen corporate governance, risk management and capital deployment to ensure long-term financial resilience.
The Commissioner for Insurance and Chief Executive of NAICOM, Olusegun Ayo Omosehin, said meeting the new capital requirements was only the beginning of a more demanding phase for the industry, stressing that the ability of insurers to manage risks, protect policyholders and sustain operations would determine the success of the exercise.
Omosehin gave the warning on Thursday at the 8th Annual Insurance Directors’ Conference held in Lagos, with the theme, “Recapitalisation to Resilience: Leading the Risk-Based Capital (RBC) Era.”
He said the completion of recapitalisation had provided a stronger foundation for the industry but cautioned that increased capital alone could not guarantee institutional stability.
“Recapitalisation was never the destination; it is the gateway to a more demanding phase — a phase that will be defined not by the size of capital alone, but by how that capital is governed, protected, deployed and aligned with risk,” he said.
According to him, the transition to Risk-Based Capital (RBC) requires insurance companies to demonstrate that their strengthened capital positions can translate into improved underwriting capacity, stronger risk management, better claims-paying ability and sustainable business growth.
He noted that experience across financial markets had shown that institutions with substantial financial resources could still fail because of poor governance, weak internal controls, ineffective risk management and inadequate board oversight.
The Commissioner consequently charged insurance directors to take greater responsibility for institutional performance, insisting that board membership must go beyond attending meetings and receiving management reports.
He said boards must actively interrogate management decisions, challenge business strategies where necessary and ensure that institutional growth ambitions align with available capital, operational capacity and approved risk appetite.
Omosehin also identified capital stewardship, effective risk governance, management accountability and strong internal control systems as critical responsibilities for directors in the post-recapitalisation era.
He warned against allowing shareholder expectations for higher returns to undermine prudential considerations, board independence or the long-term obligations of insurers to policyholders and other stakeholders.
On the regulatory framework, the NAICOM chief explained that the Minimum Capital Requirement (MCR) and Risk-Based Capital (RBC) serve complementary but distinct purposes.
While the MCR establishes the minimum capital threshold required for an insurance institution to undertake its licensed business, he said RBC goes further by assessing the risks assumed by an institution and the capital required to support those exposures.
He explained that an insurance company could meet its minimum capital requirement and still have inadequate capital relative to the nature, scale and complexity of its risk exposures.
Omosehin said NAICOM would increasingly focus its supervisory activities on capital quality, risk management frameworks, governance effectiveness, institutional resilience and insurers’ ability to meet their obligations to policyholders.
He added that the Commission would place greater emphasis on the accuracy and reliability of regulatory returns, financial reporting, actuarial assessments and disclosures.
“Successful recapitalisation does not confer permanent immunity from regulatory scrutiny. Capital adequacy is a continuous responsibility,” he said.
The Commissioner further urged insurance companies to maintain transparent and constructive engagement with the regulator, particularly where emerging vulnerabilities could affect their financial positions or ability to meet policyholder obligations.
Beyond strengthening individual insurance companies, he said recapitalisation presented an opportunity to deepen the industry’s contribution to Nigeria’s economic development.
He noted that a financially stronger insurance sector would be better positioned to support investments in infrastructure, energy, manufacturing, agriculture and construction, while expanding domestic risk-retention capacity and reducing dependence on foreign insurance markets.
According to him, increased institutional capacity could also support the development of Nigeria’s financial markets, deepen insurance penetration and improve access to affordable insurance products.
However, he stressed that these benefits would depend on insurers’ willingness to develop innovative products, improve service delivery and build public confidence through prompt and fair claims settlement.
He described claims settlement as one of the most important determinants of public confidence, noting that policyholders ultimately judge insurance companies by their willingness and ability to honour contractual obligations when insured events occur.
Omosehin also called on boards to strengthen compliance with NAICOM’s Fit and Proper requirements, which assess the competence, experience, reputation, financial soundness and ethical standing of directors and senior management personnel.
He maintained that appointments to board and senior management positions should be based on competence, character and professional capability rather than status, influence or personal relationships.
The Commissioner said the post-recapitalisation era offered the industry an opportunity to improve financial soundness, strengthen investor confidence, raise governance standards and become a more significant contributor to national economic growth.
He urged directors to ensure that the gains of recapitalisation were sustained through disciplined leadership and responsible management of institutional resources.
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