Analysts advocate stronger governance, compliance for stable insurance sector

Cynthia Ezekwe

Amidst a volatile economic environment, insurance industry experts have stressed the importance of robust governance and compliance measures to ensure the stability and growth of the insurance sector in Nigeria.

The experts, who spoke at the Chartered Insurance Institute of Nigeria (CIIN) Business Outlook conference held recently in Victoria Island, Lagos, highlighted the importance of good governance frameworks in the insurance industry. They noted that such frameworks set out the rules, practices, and structures that guide decision-making, ensure accountability, and promote transparency in financial institutions.

In his remarks, Sunday Olorundare Thomas, the commissioner for Insurance and chief executive officer of the National Insurance Commission (NAICOM), stressed the interdependence of governance, compliance, and the national budget in driving economic growth.

The commissioner further noted that sound governance and compliance with regulatory frameworks create a conducive investment climate, which attracts domestic and foreign investment. He explained that investors are more likely to invest in economies with transparent and accountable governance structures. This, in turn, can lead to increased investment in infrastructure, technology, and productive assets, all of which are key drivers of economic growth.

Olufemi Obathe, the deputy commissioner for insurance (finance and administration), NAICOM, who represented Thomas, noted that effective governance and compliance mechanisms improve access to finance for businesses, entrepreneurs, and households.

“A well-regulated financial system, supported by prudent fiscal policies, promotes financial inclusion, fosters competition among financial institutions, and encourages lending to productive sectors of the economy, fuelling investment, innovation, and entrepreneurship,” he said.

Obathe further noted that the national budget is an important source of funding for infrastructure development, such as transportation, energy, water, and telecommunications. He explained that governments often use the budget to fund large-scale infrastructure projects, such as the construction of roads, bridges, power plants, and telecommunications networks.

On his part, Edwin Igbiti, the president of the CIIN, highlighted the need for sound governance practices, noting that governance is the foundation of any successful enterprise. He explained that governance is about establishing a framework that promotes accountability, fosters a culture of integrity, and aligns the interests of all stakeholders.

“As we navigate through an era of increasing complexity, with myriad challenges and opportunities, sound governance practices should be the compass guiding us to sustainable success through adhering to the rules and regulations that govern our industry,” he said.

Igbiti went on to say that in an ever-changing regulatory landscape, where changes are often frequent and unpredictable, it is important for businesses to be agile and precise in navigating these challenges. He argued that it is not enough to simply meet the minimum requirements of regulations, but rather businesses should strive for excellence in ethical conduct and regulatory compliance.

Isioma Chukwuma, chairman of the Mandatory Continuous Professional Development (MCPD)  committee of the CIIN, stressed that it is imperative that insurance operators place a strong emphasis on governance and compliance as the cornerstones of their operations. 

According to Chukwuma, good governance requires clear lines of accountability, robust decision-making processes, and a culture of transparency. She stressed that it is the responsibility of all insurance businesses to operate with integrity and in the best interests of their policyholders and stakeholders.

The MCPD committee chairman further emphasised that the rapidly changing technological landscape and evolving consumer expectations require organisations to be agile and proactive in their approach to governance and compliance.

To achieve this, she said, insurance businesses must invest in robust governance structures, cultivate a culture of compliance at all levels of the organisation, and leverage technology to streamline regulatory processes.