NAICOM collaborates with FSD Africa to deepen Africa insurance growth

The National Insurance Commission (NAICOM) in collaboration with Financial Sector Deepening Africa (FSD Africa) has launched an initiative to deepen insurance growth in Africa.

The Commissioner for Insurance, Olorundare Sunday Thomas, speaking at the launch of the Risk Resilience and Regulatory Laboratory (R3Lab) in Lagos, explained that the Commission was committed to achieving a more resilient insurance industry in Africa.

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According to him, the setting up of the R3Lab was conceived by its development partners, Financial Sector Deepening Africa (FSD Africa) and funded by UK Aid focused on maximizing the existing untapped potentials of the African insurance industry.

“R3Lab was given impetus by a mutual interest in maximizing the untapped potential of the African insurance industry and exploring ways in which collaboration, technology and insurance supervisory capacity building is capable of not only mitigating the impact of specific challenges experienced in the regulatory environment but also improve the regulatory effectiveness of African insurance supervisory authorities,” Thomas explained.

The NAICOM boss noted that the R3Lab was set up to explore ways in which collaboration, technology and insurance supervisory capacity building can improve the regulatory effectiveness of Africa’s insurance industry.

Thomas said that collaboration, technology and insurance supervisory were capable of mitigating the impact of specific challenges experienced in the regulatory environment.

” We are all aware of the evolving risks in the African economic space such as climate change, pandemics, digitalisation, inadequate understanding and lack of confidence in the insurance sector. Also, the need for new strategies to enhance the capabilities of African insurance supervisory authorities to effectively regulate and protect insurance policyholders.

” The R3Lab offers a three-tiered approach towards creating an enabling regulatory environment and equipping the regulator with sound, proportionate and fit-for-purpose practices.

“Risk, Resilience, and Regulation are the key entry points for the R3Lab to build the technical capacity and skills of the regulator on innovation and sustainable insurance,” he said.

Thomas said R3Lab will facilitate the design of customized capacity-building programmes and set up peer to peer exchange platforms, as well as set up comprehensive learning toolkits, a resource centre for data collection and reporting, topical task forces and forums for insurance supervisors in Africa.

Thomas said that the R3 Lab platform is the third joint initiative that has been birthed through FSD Africa’s partnership with NAICOM, adding that the first was FSD Africa’s ongoing support in the review of existing regulations, including identifying and articulating the key steps, framework and tools required by NAICOM for Risk-Based Capital (RBC).

The commissioner stated that the support would enable NAICOM to fully implement a scalable RBC framework in Nigeria and help develop an innovation framework to fulfil its dual objectives of market development and policyholders’ protection.

”FSD Africa in furtherance of its support to NAICOM and the Nigerian insurance industry, officially launched the second project, the BimaLab Insurtech Accelerator in February 2022.

”The platform selects coaches and mentors insurtech firms, granting these firms access to FSD Africa BimaLab Grant Fund in developing innovative business solutions focused on solving compelling economic or social problems.

“I understand 10 selected participants are already undergoing 10 weeks of intensive mentorship and coaching.

”It is my hope that through the commissioning of these projects and platforms, we create an enabling environment for the development of insurance products which address the day-to-day challenges experienced by Nigerians in the face of environmental-related risks,” he said.

According to him, NAICOM aims to achieve greater public trust and confidence in the insurance sector through “Innovation, Distribution and Effective/Efficient Service Delivery” which has been the cornerstone of our strategic focus and actions.

Thomas commended FSD Africa for its invaluable support, noting that the availability of better products is likely to result in better service delivery and increase financial returns to investors.

The Senior Manager, Risk Regulations of FSD Africa, Mr Elias Omondi, in his presentation entitled “Risk, Resilience and Regulatory Lab (R3Lab) highlighted the purpose and objective of the R3 Lab.

The purpose of R3Lab is to encourage and facilitate regulatory interactions between insurance regulators which will strengthen their methodologies and develop solutions necessary to create an enabling regulatory environment.

Other purposes of R3Lab according to him include increasing supervisors’ and regulators’ knowledge and skills on implementation of sound, proportionate and fitting for purpose practices across the region; supporting actions, initiatives and building supervisors’ technical capacity on innovation and sustainable insurance; fostering networking with peers and more senior supervisors to identify and resolve supervisory issues faced in their on-going work and address emerging regulatory issues as well as build a multinational team of experienced leaders in regulatory and supervisory matters.

He said that it is to encourage and facilitate regulatory interactions between insurance regulators across the continent to strengthen their methodologies and develop solutions necessary to create an enabling regulatory environment.

Omondi said that R3Lab was launched for all African countries, but eight within Sub -Sahara Africa were selected as the pioneer beneficiaries of the projects, including, Nigeria, Ghana and Kenya amongst others.

He explained that the project was aimed at promoting capacity building and peer to peer exchange of the three R’s in the African insurance industry.

He said R3 exchange will support the development of a common understanding of risks and promote a shared agenda for addressing risks and vulnerabilities, aimed at establishing perceptious capabilities and practices of the African insurance industry towards addressing Environmental Sustainability Growth (ESG) issues and increasing insurance penetration across the region.

R3 Lab, he said will also support actions and initiatives, and build insurers’ technical capacity, to improve consideration of ESG in the industry’s operations and strategy; launch a coalition of “industry champions” who advocate for stronger ESG considerations by the African insurance industry aimed at building an enabling supervisory environment for ESG regulation and disclosure.

He said R3Lab will study the innovation and regulatory portraits of the eight Sub Saharan African Countries – Ghana, Nigeria, Kenya, Ethiopia,, Malawi, Uganda, Rwanda, and Zimbabwe to review and assess the state of innovation, take stock of the challenges or barriers to further innovation and ensure tailored innovation promotion action plan recommendations.

On R3Lab Resource Centre, Omondi said this will ensure the creation of a comprehensive online archive of the latest supervisory guidance from standard-setting bodies, supervisory authorities, FSD Africa research papers, Technical Assistance reports approved for public dissemination, Expert presentations etc.

“This resource centre will be available for regulators to retrieve and share information on financial supervision and regulation.

“We will create a forum for regulator education and discussion on topical issues such as innovation, climate change, green economy, ESG amongst other issues in the insurance sector,” he added.

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