NAICOM Dishes Out Three New Guidelines, Targets At Strengthening, Streamlining Policies

By LOVETH AZODO, Lagos

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The National Insurance Commission (NAICOM) has rolled out three new operational guidelines targeted at strengthening and streamlining specialized policy undertakings for operators and the insured.

Citing that the guidelines were issued in exercise of the powers conferred on it under the National Insurance Commission Act 1997 and as amended in Insurance Act 2003, NAICOM explained that the new guidelines were part of strategic objective to drive innovation of product and services and ensure professionalism amongst operators,

The three new guidelines which took effect 1st May, 2023, include Insurance Regulatory Sandbox Operational Guidelines, Market Conduct Guidelines for Takaful and Retakaful Insurance Operators, Enterprise Risk Management Framework for Takaful and Retakaful Operators in Nigeria.
 
Regulatory sandbox deals with 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 guideline read in part: “The Objective of the Insurance Regulatory Sandbox Operational Guidelines 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, to encourage innovation that will drive financial inclusion and positive competition and to promote and deliver economic benefits, by lowering the cost of business operations.
 
“The possible areas of innovation that will be allowed into the Regulatory Sandbox are as follows: Insurance solicitation or distribution, insurance products, underwriting, policy and claims servicing and any other activity within the insurance value chain”.
 
The Market Conduct Guidelines For Takaful and Retakaful Insurance Operators establishes minimum Risk Management Standards for Takaful Insurance Operators (TIOs) in Nigeria.
 
The guideline gives insight on how management of risks inherent in the TIO shall be implemented as TIO is exposed to risks that may affect its ability to achieve its objectives or even its continuing existence.

According to NAICOM, “This Guideline has been designed to articulate principles that may be
applied to a variety of circumstances, and does not prescribe specific
quantitative standards and This Guideline is applicable to all Takaful undertaking. Reference to Takaful Insurance Undertakings also refers to Retakaful Undertakings”.
 
It added that the principles and recommendations set forth in the guideline were intended to achieve the following main objectives: To help understand the risks to which a Takaful Undertaking is exposed; To provide minimum standards for the development of a Risk Management Framework for ease of Management of the Takaful
Undertaking and Supervision by its Governing bodies and Supervisory
Authorities; and to help create a safe and prudent environment for the growth, sustainability and development of the Takaful industry.

For the Enterprise Risk Management Framework for Takaful And Retakaful Operators in Nigeria, NAICOM explained that the objective of the guidelines were to set out minimum standards required from Takaful Insurance Operators in their dealings with participants/policyholders, shareholders and other stakeholders, promote greater fairness and transparency between participants/policyholders and Takaful insurance operators, establish strong market conduct and business practice amongst the Practitioners/stakeholders and enhance mutual confidence for market efficiency, set out the general licensing and authorization requirements for Takaful Insurance Operators and intermediaries to mention but a few.
 
The commission urge Takaful Insurance Operators to formally direct their staff, agents and other Business associates or partners to comply and ensure strict compliance with the guidelines and establish internal policies and procedures to give effect to the provisions of these guidelines and shall form part of their internal control.