Nigeria: NAICOM Set to Introduce Insurtech Operation Guidelines

The National Insurance Commission (NAICOM) has announced plans to release draft Insurtech Operation Guidelines, aimed at addressing evolving market dynamics and fostering innovation in the insurance sector. These guidelines will soon be made public as part of NAICOM’s efforts to keep pace with technological advancements and shifting consumer preferences.

Speaking at the 2024 Insurance Meet Tech (IMT) conference in Lagos, the Commissioner for Insurance, Olusegun Omosehin, emphasized the need for industry players to embrace innovation. He highlighted the importance of adapting to fast-paced market changes and evolving consumer tastes and lifestyles. Omosehin, represented by Dr. Julius Odidi, Head of NAICOM’s Lagos Control Office, urged underwriting firms to develop products that align with the needs of today’s consumers.

Odidi pointed out that leveraging technology is now essential for organisations looking to drive growth, enhance operational efficiency, and remain competitive in an increasingly complex business landscape. The rapid rise of insurtech presents both opportunities and challenges for traditional insurance companies, requiring them to adapt and innovate in order to stay relevant.

“To remain competitive, the commission recognizes the need to incorporate innovative insurtech solutions that can transform conventional business models,” Odidi said. He further explained that adopting these technologies would ensure the continued relevance of the insurance industry in meeting customer demands and maintaining market share.

NAICOM has already taken steps in this direction, having issued a regulatory sandbox guideline that allows for the testing and refinement of new, innovative insurance products. The commission also established a dedicated Directorate for Innovation and Regulation, acknowledging that transformative changes require new regulatory approaches.

Odidi went on to describe the current challenges facing the financial services sector, including economic instability, climate change, technological disruption, shifting consumer behaviour, inflation, and foreign exchange volatility. These factors, he noted, have significantly impacted the traditional ways in which financial services, including insurance, are delivered.

“We must embrace technology if we are to create a one-stop solution for insurance products and services,” Odidi stated.

He reaffirmed NAICOM’s commitment to ensuring prompt settlement of legitimate claims, promoting industry growth through innovation, and driving commercial value within the sector. However, he stressed that achieving these goals will require addressing several deep-rooted challenges plaguing the insurance industry.

Odidi identified key issues such as low insurance penetration, a lack of public trust, market fragmentation, the need for regulatory reforms, and the necessity of digital transformation and adaptation.

He highlighted that NAICOM’s current management is focused on strategically repositioning the Nigerian insurance industry by prioritizing critical areas that will accelerate the sector’s transformation. These priority areas include:

1. Protecting policyholders and boosting confidence in the industry.
2. Strengthening supervisory capabilities and enhancing organisational efficiency.
3. Ensuring the safety and stability of the Nigerian insurance sector.
4. Promoting innovation and ensuring the sustainability of the industry.
5. Expanding access to and increasing penetration of insurance services in Nigeria.

By implementing these measures, NAICOM aims to revitalise the insurance sector, making it more accessible, innovative, and better equipped to meet the evolving needs of Nigerian consumers and businesses.