Insurance stakeholders, comprising the Chartered Insurance Institute of Nigeria (CIIN), the Nigerian Council of Registered Insurance Brokers (NCRIB) and the Institute of Loss Adjusters of Nigeria (ILAN) have backed the insurance industry regulatory body over the ongoing recapitalisation exercise in this sector.
The stakeholders, who applauded the move at the 2019 Insurance Industry Consultative Council (IICC) Media Retreat in Ijebu Ode, Ogun State, over the weekend, believe the industry is more than ripe for another wave of recapitalisation, 12 years after the previous one.
The president, CIIN, who also doubles as the chairman of IICC, Mr. Eddie Efekoha, commended the National Insurance Commission (NAICOM) for initiating the recapitalisation, pledging operators’ support for the exercise which he believes will help grow the sector.
According to him, “The wind of recapitalisation is blowing. When we came back from the AIO in South Africa, we heard that of Ghana and the Central Bank of Nigeria (CBN) and I think the insurance regulator should be commended for setting the pace.”
While assuring that insurers will not go against its regulator because the consequences of that was too grievous, he said, however, there is a limit at which operators can control other stakeholders like the shareholders and investors.
‘‘We cannot stop them from speaking their minds, but whatever they have said do not represent the operators’ or managers’ decision,’’he pointed out.
He said that high foreign exchange rate and low capacity of some underwriters necessitated the exercise. “If these are the main reasons for the recapitalization exercise, the truth of the matter is that the exchange rate that applied in 2005/2007 is not the same in 2018/19. Secondly, if the exchange rate has changed, our ability to retain businesses has weaken. Should we enhance it? Yes! I think we should enhance it.
“I have never seen a policy that only has the good side and no bad side and no timing can be right because it is only God’s time that can be the best. I think that the more we are positive about this recapitalisation exercise, the more chances we would have on overcoming some of the challenges that comes with it,” he pointed out.
On his part, the president, Institute of Loss Adjuster of Nigeria (ILAN), Mr. Femi Hassan said, Loss Adjusters want the recapitalisation to take place because it would allow operators to put some structures in place that will help to grow the industry.
To him, “I know the operators want this recapitalisation to take place, but the investors who have put their money into the insurance companies are the ones kicking against it. But nevertheless, I am optimistic that, in the long run, every party will see reasons for it.”
Moreover, the executive secretary, Nigerian Council of Registered Insurance Brokers(NCRIB), Mr. Fatai Adegbenro, stated that the industry really need sufficient capital to meet the present business realities, while meeting their respective civic responsibilities, which is, settlement of genuine claims.
In the wake of the recapitalisation exercise, the President, NCRIB, Mr. Shola Tinubu, had earlier urged brokers to avoid insurers that are defaulting in claims payment as that could tarnish the image of the broker that brokered such insurance business.
According to him, “The news have been making rounds that some brokers still indulge in placing businesses with companies that are challenged and may have difficulty in paying claims when losses occur. This should be watched. As critical stakeholders, brokers would be watching as the implementation of the directives on recapitalisation unfolds before us.”
Stating that insurance brokers cannot pretend that the ongoing recapitalisation will not affect broking business as brokers are part of the insurance industry, he noted that, as a proactive council, NCRIB is critically examining the implications and possible solution to the effect the implementation of recapitalisation exercise would have on members.
The National Insurance Commission (NAICOM) had, earlier, jerked up the minimum paid-up capital of Insurance Companies in the country, as the new capital base requires companies that want to remain in Life Business to raise their minimum paid up capital base from N2 billion to a minimum of N8 billion; General Insurance Companies from N3 billion to N10 billion, Composite Insurance Companies from N5 billion to N18 billion, while Re-Insurance Companies would be required to have a Paid Up capital base of N20 billion from N10 billion.
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