The National Insurance Commission, NAICOM, says that insurance companies will have to renew their operating licenses every quarter when the Tier Based Minimum Solvency Capital, TBMSC, regime kicks-off.
The Commission explains that the move is to ensure that companies meet the required statutory solvency capital level for the tier which they operate. Commissioner for Insurance, Mohammed Kari, stated this at the 2018 seminar for insurance correspondents in Abuja.
Kari stated: “Insurers should not expect to get automatic license once they identify the tier they wish to operate in, rather they will be recertified every financial quarter.” The commissioner had explained that the need for classification is to enable companies operate within their financial capabilities while avoiding taking more than the risk they can undertake.
According to the Commission, TBMSC is a regulatory model for the application of proportionate solvency capital that supports the nature, scale, complexity and risk profile of the business conducted by an insurer. “The TBMSC is a complimentary measure to the ongoing implementation of the Risk-Based Supervision (RBS) programme by NAICOM.”
Kari said, “Companies take too much risk with their capital. The TBMSC is the classification of business according to the present level of capital that an insurer possesses in relation to the risks that the capital can effectively be deployed to.”
The policy, according to him, is aimed at strengthening the industry while enabling soundness and profitability through optimal utilization of capital. He added that it will also encourage insurers to focus on the areas of their strengths, encourage innovation and deepen market penetration, build investors’ and public confidence in the industry.