Findings by The Guardian revealed that a fresh capitalisation value of N8 billion; N10 billion and N18 billion has been marked into the Consolidated Insurance Bill before the National Assembly, and it is expected to take effect as soon as the house passes it into law.
Although the capital benchmark is similar to the already failed recapitalisation exercise, the upcoming one is going to be risk-based, meaning that, operators’ level of risk appetite determines the level of capitalisation, even though, N8 billion, N10 billion and N18 billion will be the minimum capital requirement.
This development has, however, raised the minimum paid-up share capital of a Life insurance company from N2 billion to N8 billion; Non-Life insurance from N3 billion to N10 billion and Composite insurance from N5 billion to N18 billion even as reinsurance companies will now be required to raise their capital base from N10 billion to N20 billion.
According to the bill prescribing a new capital, “no insurer shall carry on insurance business in Nigeria unless the insurer has and maintained while carrying on that business, a paid-up share capital of not less than N8 billion for life insurance business; non-life insurance, not less than N10 billion, and reinsurance business, not less than N20 billion.
“The paid-up share capital stipulated in subsection (1) of this section in the case of the existing insurer shall come into force on the expiration of a period of nine months from the date of commencement of this Bill.”
Commenting on the development, in Lagos at a workshop, the Director, Supervision, the National Insurance Commission (NAICOM), Barineka Thompson, said the commission is awaiting the passage of the bill into law to empower the regulator to determine the solvency capital for insurance companies.
Thompson, stressed, though, going forward, the industry would be operating on risk-based supervision and capital, there would still be a minimum capital requirement.
Similarly, the Commissioner for Insurance/Chief Executive Officer, NAICOM, Sunday Thomas, said the commission is working with the National Assembly to ensure that the bills are passed into law, adding that, he, alongside other directors of the commission, will this week, engage the House Committee on Insurance and Actuarial Matter to look at the draft bill emanating from the recently held public hearing on the bill.
“We will engage with the National Assembly to look at the insurance bill draft. The committee is currently working on harmonising the stakeholders’ views to ensure the industry has a holistic document by the time the bill becomes law and we are working closely with them on this,” he pointed out.
He added that the industry will commence implementation of the IFRS 17 under the Risk-Based Supervision in the next one to two months as staff of the commission have been trained on this.