Directors’ Conference: NAICOM harps on stronger governance, improved claims settlement
By Onu Okorie

National Insurance Commission (NAICOM) has warned insurance companies that successfully completing the recapitalisation exercise does not automatically guarantee financial stability, insisting that stronger corporate governance, effective risk management and prudent capital deployment will determine the industry’s long-term resilience.
The Commissioner for Insurance and Chief Executive of NAICOM, Olusegun Ayo Omosehin, said the industry must move beyond meeting regulatory capital requirements to building institutions capable of withstanding economic shocks, managing emerging risks and consistently meeting their obligations to policyholders.
Omosehin gave the charge while addressing participants at the 8th Annual Insurance Directors’ Conference, organised by the College of Insurance and Financial Management in collaboration with NAICOM.
The conference, with the theme, “Recapitalisation to Resilience: Leading the Risk-Based Capital Era,” provided the Commission’s first formal engagement with insurance directors in the post-recapitalisation period.
He described the conclusion of the recapitalisation exercise as an important milestone, commending shareholders, boards and management teams for the sacrifices and strategic decisions that made it possible.
However, he maintained that recapitalisation was not the ultimate objective but a gateway to a more demanding phase in which the industry must demonstrate its capacity to govern, protect and deploy its strengthened capital effectively.
According to him, the real test of the exercise will be whether the additional capital translates into improved underwriting capacity, stronger risk management, better claims-paying ability, operational efficiency and sustainable growth.
“A well-capitalised institution is not necessarily a resilient institution,” he cautioned, noting 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.
He explained that resilience goes beyond financial strength to include the ability of institutions to anticipate risks, absorb shocks, adapt to changing circumstances, recover from disruptions and continue delivering value to stakeholders.
The NAICOM chief executive identified climate-related events, cyber threats, technological disruptions, economic volatility, geopolitical developments and changing consumer expectations as emerging challenges reshaping the global insurance business.
He said these developments required insurance companies to become more innovative, technologically enabled, responsive and financially resilient.
Omosehin stressed that Nigeria could not afford to remain outside the global transformation of insurance supervision, particularly as regulators increasingly adopted risk-sensitive approaches to assessing the financial soundness of insurance institutions.
Boards Face Greater Regulatory Responsibilities
A significant part of his address focused on corporate governance, which he described as one of the most important determinants of the success of the post-recapitalisation insurance industry.
He challenged directors to move away from the traditional practice of merely receiving management reports and embrace more active oversight by interrogating management assumptions, challenging business strategies and ensuring that major decisions were supported by adequate information.
He said boards must take greater responsibility for strategic leadership, capital stewardship, risk governance, management accountability and internal controls.
According to him, directors must ensure that institutional strategies are consistent with their companies’ capital positions, business models and risk appetite, warning against expansion plans unsupported by adequate financial resources and operational capacity.
He also emphasised the need for boards to monitor how capital is generated, allocated, invested and protected, particularly against erosion arising from poor underwriting, excessive operating costs, inappropriate investments and uncontrolled business expansion.
On risk governance, Omosehin urged directors to pay closer attention to underwriting concentrations, reinsurance arrangements, investment exposures, liquidity, credit risks, operational vulnerabilities and technology-related threats.
He further called for stronger internal audit, compliance, risk management and actuarial functions, insisting that these departments must be adequately resourced, professionally competent and sufficiently independent to report weaknesses without interference.
The commissioner also advocated greater diversity of expertise on insurance company boards, saying their composition must reflect the increasing complexity of the industry.
He identified insurance, finance, actuarial science, law, investment, technology and risk management as critical areas of competence required for effective board oversight.
“Board membership is not an honorary appointment. It is a position of trust that carries significant fiduciary, professional and regulatory obligations,” he declared.
Shareholders Must Not Undermine Prudential Discipline
Addressing the relationship between shareholders, boards and executive management, Omosehin said the expectations of investors for higher returns and business growth must not override the fundamental obligations of insurance institutions to policyholders and other stakeholders.
He warned that shareholder pressure must not undermine board independence or encourage management to pursue unsustainable business strategies.
He maintained that directors must exercise independent judgement, even when their decisions conflict with the immediate expectations of influential shareholders.
He also stressed that executive management must be held accountable for prudent resource utilisation, business performance, regulatory compliance and the implementation of board-approved strategies.
NAICOM Signals Tougher Risk-Based Supervision
On the regulatory implications of the transition, Omosehin explained that the Minimum Capital Requirement (MCR) and Risk-Based Capital (RBC) serve complementary but distinct prudential purposes.
While the Minimum Capital Requirement establishes the baseline capital threshold an insurance company must maintain to undertake its licensed business, Risk-Based Capital 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 insufficient capital relative to the nature, scale and complexity of its risk exposures.
Consequently, he said NAICOM’s supervisory approach would increasingly focus on capital quality, risk management frameworks, governance effectiveness, institutional resilience and the ability of companies to meet policyholder obligations.
He disclosed that the Commission would place greater emphasis on the accuracy and reliability of regulatory returns, financial reporting, actuarial assessments and institutional disclosures.
Insurance companies, he said, must ensure that information submitted to the regulator is accurate, complete, timely and reflective of their actual financial and operational conditions.
Omosehin also warned that successful recapitalisation would not exempt companies from continuous regulatory scrutiny, stressing that capital adequacy remained an ongoing responsibility rather than a one-off exercise.
He urged insurance institutions to maintain transparent and constructive engagement with the Commission, particularly when emerging developments could affect their financial condition or ability to fulfil policyholder obligations.
Stronger Insurance Industry Expected to Support Economic Growth
The commissioner said the significance of recapitalisation extended beyond individual insurance companies, describing it as an opportunity to strengthen the industry’s contribution to Nigeria’s economic development.
He noted that critical sectors, including infrastructure, energy, manufacturing, agriculture and construction, required a financially strong insurance industry capable of supporting investments and managing increasingly complex risks.
He said stronger domestic insurance capacity would also help Nigeria retain more risks within the country, reduce dependence on foreign insurance markets and position insurance companies as significant sources of long-term institutional investment.
Additionally, he identified opportunities for increased insurance penetration, affordable insurance products and broader financial inclusion.
However, he cautioned that these benefits would not materialise automatically without improved service delivery, innovative products and greater commitment to supporting productive economic activities.
He particularly challenged insurance companies to rebuild public confidence through prompt and fair claims settlement.
According to him, the public does not ultimately measure an insurance company’s strength by the size of its capital but by its willingness and ability to honour contractual obligations when insured events occur.
He therefore urged boards to place policyholder protection at the centre of their corporate strategies.
Competence, Integrity Key to Insurance Leadership
Omosehin also underscored the importance of the Fit and Proper Framework in strengthening corporate governance, describing it as a fundamental safeguard for the industry.
He said directors, chief executives and key management personnel must possess the necessary qualifications, experience, competence, reputation, financial soundness and ethical standing to discharge their responsibilities.
He warned against appointments based solely on status, familiarity, influence or personal relationships, insisting that competence, character, capability and commitment must guide the selection of individuals into leadership positions.
He added that boards must continuously assess, monitor and document compliance with fit-and-proper requirements throughout the tenure of directors and senior executives.
Concluding, Omosehin challenged insurance directors to reflect on whether recapitalisation had genuinely strengthened their institutions or merely enabled them to satisfy regulatory thresholds.
He also urged them to examine whether their boards possessed the expertise to challenge management decisions, whether capital was being deployed prudently and whether stronger financial positions were translating into improved underwriting, claims settlement and public confidence.
He said the decisions taken in corporate boardrooms would determine whether the gains of recapitalisation were sustained and whether the Nigerian insurance industry became more competitive and relevant to national development.
He called on directors to recognise themselves as custodians of policyholders’ trust, stewards of shareholders’ investments and guardians of institutional integrity.
He expressed optimism that the post-recapitalisation era could become a turning point in the industry’s development, provided stakeholders translated increased capital into stronger institutions, better governance and greater public confidence.