Our reporter/ The Chairman, United Bank for Africa and Heirs Holdings, Tony Elumelu, on Monday stressed the need for recapitalisation of firms in the Nigerian insurance industry, noting that the current N8billion capital base for life and N10 billion for general is grossly inadequate.
Elumelu, who made the call in Abuja at the on-going National Insurance Conference 2023, organized by National Insurance Commission (NAICOM), proposed a N50 billion capital base for consolidated insurance companies, with general business N30 billion and life businesses N20 billion.
The Heirs Holdings Chairman, also said insurance brokers capital base should be increased to N1billion.
He further called for a review of the dichotomy in Insurance authorisations/licences between life and non-life, adding that regulation should be used to shape behaviour and enforce compliance.
Elumelu called on the National Insurance Commission (NAICOM) to focus on substance and things that will shape the
sector and stop approving adverts, stressing that NAICOM should use that time for more important aspects of regulation and save taxpayers money for more catalytic actions.
He maintained that today, capital requirements are set at N8 billion for Life insurance and N10 billion for general insurance, adding that with the devaluation of the currency, the capital amount to about USD8 million, USD10 million capital requirements for an insurance company
in Africa’s largest economy.
“How can an industry intended to ‘insure’ and mitigate the risks associated with economic growth of a country have such low capital requirements.
“Let me be clear, recapitalisation is not about increasing the barriers
to entry into theindustry.Gatekeepingis not the objective here.
“But we must ensure that the sector has the financial muscle and backbone to handle more complex insurance transactions whilst extending reach.
“That is the only way the industry can scale and expand operations out of Nigeria and into Africa!,” he said.
He also proposed that all insurers should mandatorily contribute 0.5 per cent of total revenue to drive industry awareness for five years, adding that the Nigerian Insurers Association (NIA) should administer this professionally.
Leave a Reply