Cynthia Ezekwe
Edwin Igbiti, president of the Chartered Insurance Institute of Nigeria (CIIN), has called on industry regulators to adopt risk-based supervision (RBS), described as a more flexible regulatory approach that takes into account the dynamic nature of risks to ensure that the insurance sector remains resilient, adaptive, and stable in the face of emerging challenges.
In his assessment, Igbiti suggested that risk-based supervision could provide a robust solution to the insurance industry’s regulatory hurdles.
According to Igbiti, RBS is a structured, yet adaptable, forward-thinking process designed to pinpoint, assess, and manage key risk factors that could potentially impact both individual insurers and the industry as a whole. He explained further that the tailored, proactive framework enables regulatory authorities to identify, measure, monitor, and mitigate risks in a more effective and targeted manner, bolstering the insurance sector’s resilience and stability.
The CIIN president underscored the current critical juncture at which the insurance industry finds itself, a time defined by accelerating technological advancements, shifting customer demands, and multifaceted global challenges.
As such, Igbiti urged regulators to adopt a risk-based supervision approach that would zero in on the unique risks faced by individual insurers, thereby equipping them with the tools and knowledge necessary to weather potential shocks, strengthen their resilience, and foster a more stable industry overall.
Igbiti highlighted further that risk-based supervision offers lots of benefits to the insurance industry including:
– Enhanced resilience: Risk-based supervision enables insurers to better identify, assess, and manage their risks, leading to enhanced resilience and stability.
– Improved policyholder protection: By ensuring that insurers are adequately prepared for potential risks, policyholders can have greater confidence in the industry’s ability to pay claims and provide protection.
– Increased efficiency: Risk-based supervision allows regulators to focus on high-risk areas, reducing the burden on low-risk insurers and increasing overall efficiency.
Igbiti placed particular emphasis on the need for the insurance industry to adopt and embrace risk-based supervision practices. He posited that by implementing these robust practices, the industry can fortify itself against potential disruptions and establish a solid foundation for sustainable growth and stability.
This, in turn, would enable the insurance sector to harness the opportunities presented by technological advancements and evolving customer expectations, and position itself as a reliable and forward-thinking industry capable of navigating the ever-changing landscape of the modern world.
The CIIN president also emphasised the significance of cross-industry collaboration in implementing risk-based supervision practices. With the aim of building a more stable and innovative future for the insurance sector, Igbiti asserted that regulators, insurers, and industry players must come together and capitalise on this opportunity to instil a higher degree of resilience and sustainability in the insurance industry.
Joyce Odiachi, the head of technical services at Royal Exchange General Insurance Company (REGIC), also acknowledged the significance of risk-based supervision, which she defined as a tool that allows organisations to gain a comprehensive understanding of their operations and the potential risks they may face.
According to Odiachi, RBS is a powerful tool that can help insurers anticipate and address complex risks, safeguard policyholders, and build a more stable and sustainable future for the industry. However, she cautioned that a successful implementation of RBS requires a concerted effort and investment in the necessary human and technological resources.
