Lagos, May 13, 2023 – the National Insurance Commission (NAICOM) has issued guidelines to ensure that operators conform with professional best practices.
A statement by Rasaaq Salam, the Head of NAICOM Corporate Communication and Market Development, listed the guidelines to include Insurance Regulatory Sandbox Operational Guidelines and Market Conduct Guidelines for Takaful and Retakaful Insurance Operators.
The third is the Enterprise Risk Management Framework for Takaful and Retakaful Operators.
According to the statement, the Commission expects all operators to ensure compliance with the new guidelines to the benefit of all stakeholders.
The first rule, Insurance Regulatory Sandbox Operational Guidelines, provides insurance institutions, other firms and persons the opportunity to test business models, products and services that will enhance efficiency in meeting consumers’ needs.
It is also designed to encourage innovation that will drive financial inclusion and positive competition, as well as to promote and deliver economic benefits, by lowering the cost of business operations.
The second rule, Enterprise Risk Management Framework for Takaful and Retakaful Operators, is designed to articulate principles that may be applied to a variety of circumstances, and does not prescribe specific quantitative standards.
This is taking into consideration the differences in the environments in which different Takaful insurance operators operate, as well as the differences in their Operational Frameworks.
The principles and recommendations set forth in the guidelines are intended to help understand the risks to which a Takaful undertaking is exposed by providing 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.
It is equally aimed at helping to create a safe and prudent environment for the growth, sustainability and development of the Takaful industry.
Market Conduct Guidelines For Takaful and Retakaful Insurance Operators sets out minimum standards required from Takaful insurance operators in their dealings with participants/policy holders, shareholders and other stakeholders.
While promoting greater fairness and transparency between participants or policyholders and Takaful insurance operators, it is also intended to establish strong market conduct and business practice amongst the practitioners or stakeholders and enhance mutual confidence for market efficiency.
It further highlights the general licensing and authorization requirements for Takaful insurance operators and intermediaries as well as states the responsibility of Takaful Insurance Operators in ensuring that their activities are properly coordinated and are carried out in a professional manner.
The guidelines provide principles to ensure that customers are treated fairly prior to the inception and discharge of the contract, while also providing the Board of Directors and Management of Takaful Insurance Operators with a framework for the establishment of policies and procedures for effective Takaful operations. (GBN)
