National Insurance Commission (NAICOM)
Key players in the nation’s insurance industry have finally agreed to recapitalize the sector, saying it will streamline and strengthen underwriting firms that will survive the new capital regime.
They noted that insurers’ capacity would be enhanced and enable the underwriters to meet their traditional obligation of prompt payment of claims.
Operators had commended the National Insurance Commission (NAICOM), for setting the recapitalization pace and initiating the consolidation for others to follow.
On May 20, 2019, NAICOM announced a new capital base for insurance and reinsurance companies in a circular to chief executive officers of licensed operators.
It pegged life insurance companies’ capital base currently N2b to N8b a 300 percent increase, while non-life or general business are required to raise their capital base to N10b from N3b.
Composite companies, which combine both life and non-life businesses are expected to also raise their capital adequacy to N18b from N5b just as reinsurance companies will raise their capital to N20b from N10b.
NAICOM stated that the increase was to ensure that underwriting companies have adequate capacity to pay claims as and when due, adding that June 30, 2020 is the deadline for the exercise. Reacting to speculations that insurers might engage the regulator to either reduce the proposed capital base or extend the deadline, industry operators said they would not engage the commission.
They rather commended NAICOM for taking a lead in the initiative against the banking industry’s recapitalization announced by the Central Bank of Nigeria (CBN) two months after South Africa, Ghana and Morocco.
President, Chartered Insurance Institute of Nigeria (CIIN), Eddie Efekoha, assured that the insurance industry would support NAICOM to develop the sector.
“The wind of recapitalization is blowing. When we came back from South Africa, we heard that of Ghana and the CBN and I think the insurance regulator should be recommended for setting the pace.“I can assure you that the operators will not go against the initiative because the consequences of that are too grievous.
“However, there is a limit to 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’ decision,” he stated.
Managing Director and Chief Executive Officer, Sunu Assurance Plc, Samuel Ogbodu, also supported the new recapitalization exercise, saying that a new capital regime, when concluded, would enable companies to do big-ticket businesses from acting as foreign insurance agents as they currently do. Ogbodu, who spoke in Lagos at the weekend, said: “The step would not only help to consolidate the sector with the provision of more robust opportunities for large ticket transactions.”
