The Commissioner for Insurance and Chief Executive of the National Insurance Commission (NAICOM), Olusegun Ayo Omosehin, has told directors of insurance companies that meeting new capital requirements does not make an institution resilient, urging boards to take firmer control of governance, risk and capital management as the industry enters the Risk-Based Capital (RBC) era.
Speaking on Thursday at the 8th Annual Insurance Directors’ Conference in Lagos, Omosehin said the recapitalisation exercise had been concluded and commended shareholders, boards and management for their commitment and sacrifices.
He stressed, however, that the next phase is far more demanding.
“Recapitalisation was never the destination; it is the gateway to a more demanding phase,” he said, adding that the new phase “will be defined not by the size of capital alone, but by how that capital is governed, protected, deployed and aligned with risk.”
The conference, organised by the College of Insurance and Financial Management in collaboration with NAICOM, was themed “Recapitalisation to Resilience: Leading the Risk-Based Capital (RBC) Era.”
The address marked the commissioner’s first formal engagement with directors in the post-recapitalisation period.
Omosehin devoted much of his address to corporate governance, which he described as one of the most important determinants of the success of the post-recapitalisation industry.
He said a well-capitalised institution is not necessarily a resilient one, noting that firms with substantial resources can still fail because of poor governance, weak internal controls, ineffective risk management, inappropriate investments and inadequate board oversight.
He called for an end to the era in which boards were mainly recipients of management reports.
“Effective boards must ask difficult questions, interrogate management assumptions, challenge strategies where necessary and ensure that decisions are supported by adequate information and sound judgement,” he said.
The NAICOM chief expects boards to take stronger ownership of strategic oversight, capital stewardship, risk governance, management accountability, internal controls and board composition.
On capital, he said directors must ensure it is not eroded through poor underwriting, excessive operating costs, inappropriate investments or uncontrolled expansion.
“Capital management must be a continuous board responsibility and not merely a matter for the finance department or an occasional regulatory review,” he said.
He also warned directors that “board membership is not an honorary appointment,” describing it as a position of trust with significant fiduciary, professional and regulatory obligations.
Omosehin acknowledged that investors who put in fresh capital have legitimate expectations of returns and growth but said these must be balanced against obligations to policyholders, creditors, employees, regulators and the public.
“Shareholder interests must not override prudential considerations, undermine board independence or encourage management to pursue unsustainable business strategies,” he said.
Explaining the shift in supervisory philosophy, he said the Minimum Capital Requirement sets the baseline an insurer must hold to operate, while Risk-Based Capital looks at the risks an institution assumes and the capital needed to support them.
“An institution may satisfy its minimum capital requirement but still have insufficient capital relative to the nature, scale and complexity of its risk exposures,” he said.
The commissioner said NAICOM’s supervision would increasingly focus on the quality of capital, risk management frameworks, governance effectiveness, institutional resilience and the ability to meet policyholder obligations.
He also announced greater emphasis on the quality and reliability of regulatory returns, financial reporting, actuarial assessments and disclosures, and expects information submitted to the Commission to be accurate, complete and timely.
“Successful recapitalisation does not confer permanent immunity from regulatory scrutiny,” he said. “Capital adequacy is a continuous responsibility.”
Omosehin said a stronger industry should support infrastructure, energy, manufacturing, agriculture and construction, deepen domestic risk retention, reduce reliance on foreign insurance markets, and expand insurance penetration and financial inclusion. He challenged insurers to “translate their strengthened capital positions into greater economic relevance.”
On public confidence, he said claims settlement is one of its most important determinants. “The public does not measure the strength of an insurance company by the size of its capital alone,” he said, urging boards to place policyholder protection at the centre of their strategies.
He described the Fit and Proper Framework as “a fundamental governance safeguard” and said appointments should never be based solely on status, familiarity, influence or relationships, but on competence, character, capability and commitment. He added that boards themselves must continuously assess, monitor and document compliance throughout the tenure of directors and senior executives.
Closing his address, Omosehin posed questions for reflection, including whether recapitalised institutions are genuinely stronger or have merely satisfied a regulatory threshold, and whether boards are equipped to understand and challenge the risks they take.
“You are not merely directors of insurance companies,” he told the gathering. “You are custodians of policyholders’ trust. You are stewards of shareholders’ investments. You are guardians of institutional integrity.”
He said the decisions taken in boardrooms today would determine whether the gains of recapitalisation are sustained and whether the industry earns the confidence of Nigerians.
