NAICOM sees Afro Asian, Shepherds synergy a boost for reinsurance capacity, profitability

A new synergy between Afro Asian Insurance Services Limited, an international insurance and reinsurance brokers and Nigeria’s Shepherds Insurance Brokers targeted at building stronger reinsurance capacity would enhance underwriting result and profitability of local market, the National Insurance Commission (NAICOM), said.

According to the Commission, this initiative is coming at the right time when underwriting statuses of most companies’ needs improvement to boost bottom line and increase shareholder value.

Fola Daniel, commissioner for Insurance made the remark at a one-day seminar organised in Lagos by Shepherds Insurance Brokers in partnership with Afro Asian Insurance Services for chief executives of insurance companies with the theme “Reinsurance at the Board Level.”

Daniel, represented by Monday Faruna, assistant director, Supervision in NAICOM said “the importance of reinsurance cannot be over-emphasised as we all know that reinsurance and risk management is a catalyst for effective portfolio management. “Reinsurance is not only a management tool for successful underwriting but also a boards deliberate road map to profitability.”

John Arpel, chartered insurer and chief executive officer, European Services Group in his presentation “Managing Risk in an Insurance or Reinsurance Company” said though the management of a company is ultimately responsible for a company’s risk management, the board of directors must understand the risk facing the company and oversee the risk management process.  Arpel said this is why directors both executive and non-executive directors must understand their company’s business model and key financial metrics. “This will help directors to identify the greatest corporate governance risks facing the company at any given time.”

According to him, since most organisations have began the culture of enhancing their internal controls and policies, its continuous review by the board will provide the opportunity to assure that compliance reflects the state-of-the-art, best practices of corporate governance in such wide-ranging areas as revenue recognition, the role of audit committee, insider trading policies and document retention.

Arpel describes risk management as the process by which the management subject to board oversight assesses the nature and scope of risks applicable to a company; designs and applies appropriate controls to minimise the risks and also monitors the controls to ensure that they are working effectively.

“Because risks will not always fall clearly into one category, a company should develop a comprehensive risk management plan in which the approaches to the various components of risk interact with and influence one another.”