The Federal Government is coming up with Risk Based Supervision (RBS), a new policy, that restricts insurance companies to their areas of competence and ability.

This was disclosed in Lagos by the Commissioner for Insurance Alhaji Muhammed Kari during an Executive Breakfast meeting organised by the Society for Corporate Governance Nigeria, (SCGN).

Kari noted that the new policy would introduce a ‚Äúrisk-based system‚ÄĚ where companies would be restricted to their areas of competence and abilities instead of the ‚Äúrule-based system‚ÄĚ in operation, where companies operate regardless of the level of their capital.

He said the policy was being worked on and that when it was ready, “companies with capital-base of about N2 billion would restrict their operations to activities like insurance of motor cars, buildings for fire and the like, while those with higher capital base can go into oil, ship, aircraft and engineering equipment.

“What we are coming out with is going to force companies to operate within their ability to their capital asset so that the policy holder and companies are protected against their wishes to go into areas where they cannot afford.

“We are used to classify companies with the capital they can bring in but we are getting to the process of introducing risk-based classification which will try to see what your asset or capital can cover.

“I don’t see the stock market growing again, of course it is dry now, I don’t see the banking sector growing bigger but the insurance penetration is under one per cent and under one per cent contribution to the nation’s Gross Domestic Product (GDP),

‚ÄúThere is a lot of potentials in the biggest economy in Africa, with the population we have, you can imagine if we are able to increase our earnings and make companies responsible, you can imagine what it will be, it will help the economy, create employment and bring financial support to businesses and government.‚ÄĚ

Right now, majority of the risks in Nigeria are funded by government, whether building collapse, flood, deaths, when people can take insurance in all of these things.‚ÄĚ