NAICOM rolls out new guidelines for insurance industry

The guidelines are: Insurance Regulatory Sandbox Operational Guidelines; Market Conduct Guidelines for Takaful and Retakaful Insurance Operators and Enterprise Risk Management Framework for Takaful and Retakaful Operators in Nigeria.

Rasaaq Salami Head, Corporate Communication and Market Development of the Commission said the three guidelines were issued “as part of the commission’s strategic objective to drive innovation of products and services, ensure operators are professional in the conduct of their businesses in line with best practices, recently”

The commission he said “expects all operators to ensure compliance with the new guidelines to the benefit of all stakeholders.

One of the guidelines is the ‘Regulatory Sandbox’. This refers to a consciously established relaxed regulatory environment for the testing of innovative products, services, business models, channels of distribution subject to regulatory discretions and set parameters that have potential of improving insurance inclusiveness and service efficiency in Nigeria.”

The objectives of issuing the Regulatory Sandbox, guidelines Rasaaq said is to provide insurance institutions, other firms and persons the opportunity to test business models, products and services that will enhance efficiency in meeting consumers’ needs; encourage innovation that will drive financial inclusion and positive competition; and promote as well as deliver economic benefits, by lowering the cost of business operations.

The possible areas of innovation that will be allowed into the Regulatory Sandbox are: insurance solicitation or distribution; insurance products; underwriting; policy and claims servicing and any other activity within the insurance value chain.

Rasaaq Salami noted that “the approval granted to participate in the sandbox may be revoked by the commission at any time before the end of the testing period if: the participant has failed to comply with the conditions stipulated for operation within the Sandbox; the participant has acted in a manner that is detrimental to customers and the public; critical/technical flaws are observed and have remained unresolved for 30 days.

Other grounds on which the Regulatory Sandbox can be revoked he identified include: the participant has misled and/or concealed material facts from the commission and/or customers; the participant is undergoing or has been liquidated; the participant has failed to sustain the safeguards for the users of the service and any other reason that the commission considers critical to the continued operation of the testing.

Another guideline released yesterday was the Enterprise Risk Management (ERM) Framework which is intended to establish minimum Risk Management Standards for Takaful Insurance Operators (TIOs) in Nigeria.

Under this guideline. all Takaful Insurance undertaking will henceforth establish and maintain a sound ERM Framework to support the adequacy of its solvency and comply with all relevant Sharī`ah rules and principles. This framework is expected to be “comprehensive in nature, dealing with all reasonably foreseeable and relevant material risks of the funds making up the Takaful Undertaking, and shall be formalized through a set of policies, consistently applied, the TIO’s approach to determining the appetite for risk, its process for managing risks and its Governance related to risk,” Rasaaq said.