THE National Insurance Commission (NAICOM) has been in the eye of the storm since it commenced recapitalisation in 2018 till date. Many forces from the insurance shareholders and operators who are finding it difficult to meet the recapitalisation mandate have been working against it.
While many obstacles have been built around it, the most recent one came from members of the House of Representatives last week when the members resolved that NAICOM should suspend the planned December 31, 2020 mandatory deadline for the first phase of 50 to 60 per cent of the minimum paid-up share capital for insurance and reinsurance companies for a minimum of six months from January 2021. The House believes this will cushion the effect of COVID-19 and other unforeseen circumstances on the industry.
Findings show that operators have been lobbying the members, citing COVID-19 and #EndSARS as reasons the exercise should be stalled.
But the regulator has said it is not shaken even with the call by the House to suspend the exercise.
The commission, which is upset that it has on three occasions extended the deadline for recapitalisation, just to accommodate the grievances of the operators and other stakeholders.
The Commissioner for Insurance, Mr Sunday Thomas, said the call by the House was not much of an issue to them.
He said the commission did not receive any resolution from the House as they only read it in the newspapers.
He urged operators to stop linking #EndSARS, COVID-19 pandemic and other sentiments to reason the recapitalisation should be suspended, noting that the commission has yielded to the demands for extension and other concession severally.
He stated that recapitalisation is expected deepen insurance market and strengthen insurance companies so that big ticket risk can be taken and retained in the country.
He said: “First and foremost, I think it is not as much as an issue. I have just heard this and there are processes and procedures for communicating such directives. So, the best I will do this is to wait until I am formally notified of the resolution passed by the National Assembly. I will rather wait until the processes and procedures for convening the resolutions to us are carried out.
“We have engaged the market on the need for recapitalisation and, for us, it is not as much as whether one wants to backdown or not. I think what is important is the interest of the industry. We need to deepen insurance market and that is what we will do.
“This is what the whole exercise is all about. For now, with respect to the call for suspension of the exercise, there is need to separate the issue of the deadline and aftermath of #EndSARS. Let’s separate them and put them in the right perspective. I believe that the entire recapitalisation being mixed up with the issue of #EndSARS may not be an issue for consideration.”
He further stated that while the unexpected had happened this year, it might not be as bad as it looked.
“I must say this year may not be totally as bad as it looks. If we look at the numbers, in spite of what we went through, the variance is not as massive as what it was. We haven’t had the total figure but from the interim number that we are getting it may not be as bad. We believe that we have a great year ahead of us. Yes, the unexpected happened. Most part of the country has had a lot of inactivities and those initiatives that are lined up for realising some of the goals could not be achieved. Deepening the insurance market was and still is our goal.
“We set out not just about regulation but about developing the market. Some of the mechanism of developing the market was reaching out. We couldn’t do much of this because of the restriction on movement. But not withstanding inhouse we were developing some things that we believe will deepen the market. Just about three week ago, we were able to register five additional companies, four insurance companies and one reinsurance company. Before then, the last insurance company that was registered or licensed in Nigeria was about 35 years ago.
“So, we believe that we need additional operator in that area because the level of retention is on the downward trend. We need to shore up this by renting a licence to a local company. We see what is happening within the pension arena. The pension assets are over N11 trillion. The insurance sector ought to be leading. We are, however, optimistic that out of the four insurance companies that we registered, three of them are life companies that will be playing in the annuity business under the pension act. We expect that the activity will assist in deepening the market. The issue of recapitalisation was expected to strengthen the company so that big ticket risk can be taken and retained largely within the market. But if we see the content of the resolution, then we’ll see how to progress from there. Other than that, the issue of human capital development we are pursuing this.
Speaking on post-recapitalisation, the commissioner said the capacity of the industry is expected to be bigger.
“We will not just be efficient in managing the local risk but also we will bring in more from other jurisdiction and with the free trade area initiative, we expect this to enhance our access to businesses from another jurisdiction,”he added.
The decision by the House of Representatives was sequel to the adoption of a motion of urgent public importance sponsored by Benjamin Kalu (APC, Abia) and 15 others at plenary.
Moving the motion, Kalu said: “This is pertinent because in addition to the impact of the COVID-19 pandemic, the industry was also affected by the aftermath of the #ENDSARS protest in which several insured properties were affected and to this effect, most of these insurance companies have huge liabilities to settle to fulfil their obligations so as not to deny the rights of these affected insured persons.
“These are the types of fiscal, monetary and regulatory approaches that are being adopted in most countries. Hence, it may not be suitable at this time for NAICOM to even proceed with its planned phased recapitalisation progrmame because of the overall impact it may have on the already fragile economy and the insurance sector,” Kalu said.
He noted that if NAICOM was allowed to proceed with its programme, it could affect the economy and slow down the recovery process.
