NAICOM orders year-end claims settlement, strengthens oversight

In a significant push to reinforce credibility within Nigeria’s insurance sector, the National Insurance Commission (NAICOM) has directed all insurance companies to settle outstanding claims by December 31, 2024.

This directive was announced by Mrs. Ebelechukwu Nwachukwu, head of the Communication and Stakeholders Management Sub-committee of the Insurers Committee, following their recent meeting in Lagos.

The meeting was the first to be held under the leadership of the new Commissioner for Insurance, Mr. Segun Omosehin.

Addressing industry leaders, Mr. Omosehin underscored the critical importance of prioritizing claim settlements to maintain public trust and uphold best practices.

“This move is necessary for strengthening the industry’s reputation and ensuring accountability,” said Nwachukwu, who also serves as Managing Director of Rex Insurance Ltd.

She highlighted that CEOs were instructed to eliminate any unresolved claims from their financial records before the year-end.

Industry analysts have welcomed NAICOM’s firm stance on outstanding claims. “This directive sends a clear message that regulatory oversight is intensifying, which should reassure policyholders and stakeholders of the industry’s commitment to financial integrity,” noted Bamidele Ojo, an insurance expert at Abuja-based consultancy firm InsureWise.

In addition to the claims settlement directive, NAICOM advised insurers to consider recapitalization to fortify their financial positions. This proactive measure would help companies meet potential future regulatory requirements and maintain stability in a competitive landscape.

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Nwachukwu encouraged insurers to initiate discussions with their boards and shareholders on this topic to ensure readiness.

To support the industry’s adherence to high standards, NAICOM has circulated a draft of Risk-Based Supervision (RBS) regulations to guide insurers. The RBS approach aims to assess the overall risk profile of insurance companies, ensuring they align with prudent management practices.

The commission also reiterated the importance of compliance with the “no premium, no cover” regulation. Breaches by brokers have been noted, and NAICOM emphasized that policies should only be issued once premium payments are secured to support the sector’s cash flow and operational health.

In efforts to align with broader regulatory expectations, NAICOM directed insurers to adhere to Nigeria’s Data Protection regulations, emphasizing the need for robust consumer data management to build trust.

The commission also encouraged participation in the recently approved National Credit Guarantee Scheme, suggesting that this could open avenues for insurers to influence governance decisions and strengthen their strategic foothold in the financial sector.

The ongoing development of the NAICOM portal, aimed at streamlining administrative processes and enhancing transparency, was also discussed. The portal is expected to bolster service delivery across the industry by facilitating smoother operations and regulatory reporting.

Nwachukwu concluded by emphasizing that these initiatives are integral to achieving sustainable growth in the insurance sector. “The sector is poised for transformation, guided by strong regulations and a shared commitment to growth,” she remarked.