NAICOM asks insurers to convert capital into capacity

National Insurance Commission

The National Insurance Commission has challenged insurance companies to convert the capital raised during the sector’s recapitalisation exercise into stronger underwriting capacity, faster claims settlement and improved customer service.

Commissioner for Insurance, Olusegun Omosehin, said the success of the recapitalisation should not be measured by the amount of capital injected into insurance companies but by the additional capacity created by the funds.

Omosehin, who was represented by the Head of NAICOM’s Lagos Control Office, Julius Odidi, spoke at a conference themed “From Capital to Capacity: Driving Growth, Innovation and Trust in Nigeria’s Insurance Sector.”

The commissioner said stronger balance sheets should enable insurers to take on larger risks, meet claims obligations, invest in technology and improve confidence in the industry.

“Financial strength, while necessary, is not an end in itself. The true purpose of capital is to create capacity; the capacity to underwrite risks, the capacity to pay claims, the capacity to innovate, the capacity to inspire confidence, and ultimately, the capacity to support economic growth,” he said.

He urged insurers to assess the impact of recapitalisation by measuring improvements in underwriting capacity, claims-paying ability, customer satisfaction and public confidence.

According to him, the industry’s ability to deliver better services will be critical to determining whether the recapitalisation achieves its broader objectives.

Omosehin also identified population growth, infrastructure development, the expansion of the digital economy, agricultural transformation and the growing middle class as areas that could create new opportunities for insurers.

He said insurers would need to use technology, data analytics and artificial intelligence to develop products that are more affordable, accessible and responsive to changing consumer needs.

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“In today’s world, innovation is no longer optional; it is the currency of relevance,” he said.

The commissioner also linked insurance penetration to the industry’s ability to build public trust, stressing that insurers must demonstrate their value by meeting their obligations to policyholders.

He described claims payment as one of the clearest measures of an insurer’s commitment to customers.

“The true test of any insurance company is not how many policies it sells. The true test is how effectively it responds when policyholders need support,” he said.

He said insurers must also strengthen their human capital as the industry faces emerging risks linked to cyber threats, climate change, artificial intelligence, supply-chain disruptions, pandemics and geopolitical developments.

“The industry’s capacity will ultimately be determined by the quality of its people,” he said.

Omosehin called for closer cooperation among NAICOM, insurers, brokers, policymakers, the media and policyholders to strengthen the industry.

He said the next phase of reform should focus on converting additional capital into operational capability, innovation and greater public confidence.

“The journey from capital to capacity is not one that NAICOM can undertake alone. It requires collaboration, partnership and leadership from every stakeholder,” he said.