The Nation Newspaper

Tag: National Insurance Commission

  • Insurance CEOs, others welcome new capital base

    Insurance CEOs, others welcome new capital base

    • NAICOM hails new Bill

    Following the passage of the New Insurance Consolidated Bill by the Senate to amend the laws and refocus the sub-sector in line with current realities, experts and insurance chief executives have described the bill that also raises minimum capital of insurance companies as a welcome development.

    The National Insurance Commission (NAICOM) hailed the passage of New Insurance Consolidated Bill by the Nigerian Senate, saying it sees brighter future for the sector

    The Managing Director, Rex Insurance Plc, Mrs. Ebelechukwu Nwachukwu said although she has not really read the Bill in detail, it is however a step they appreciate.

    She said the Insurance Act 2003 was really out-dated, adding that NAICOM has done well using guidelines to bridge the gap.

    Mrs. Nwachukwu said the Act will address issues as they are today and incorporate a number of excluded compulsory products.

    For the new shareholdings, she said, they are waiting to see where it would land, hoping that shareholders will be happy with the development, especially because returns from the industry have not been optimal.

    She expressed optimism that the future is Insurance and they look forward to it.

    Insurance Analyst, Obinna Chilekezi, also said the current capital of insurance companies is currently very low because of the value of naira as at date and inflation hence they agree in the insurance sector that it should be raised.

    He however said that the way the adoption of Risk Based Capitalisation stipulated in the Bill, which is what the Nigerian insurance sector has been practising will not encourage inclusive insurance as the capital requirement only supports mega companies.

    Read Also: Senate proposes N35bn new capital requirement for reinsurance firms in Nigeria 

    Meanwhile, the regulator, NAICOM has welcomed the passage of the new Bill by the Upper Chamber of the National Assembly and is optimistic that the legislation will unlock the growth, prosperity, and potentials of the sector.

    The Commissioner for Insurance, Mr. Olusegun Omosehin in a statement released by the Commission, said the passage of the Bill has marked a significant milestone in the country’s efforts to revamp the insurance industry after nearly two decades.

    He said: “The Commission believes that the Bill is a game changer for the Nigeria’s insurance industry, and is going to have high positive impact on the contribution of insurance sector to the country’s GDP and economy as a whole. By consolidating existing insurance laws, the new legislation marks a new era in the ongoing efforts to strengthen the Nigeria’s insurance industry. The bill provides a comprehensive framework for regulating all types of insurance businesses and ensuring a more robust and effective industry.

    “Passage of the Bill marks a significant triumph for Nigeria’s insurance industry, tackling the long-standing challenge of low insurance penetration in the country. The new legislation addresses the industry’s need for a more robust legal and regulatory framework, enabling it to compete favorably in the African insurance market and globally”.

    The Commissioner disclosed that the newly passed bill introduces several pivotal provisions aimed at fortifying the industry.

    He listed key highlights of the legislation as Enhanced Capital Requirements: New minimum capital requirements for insurance companies, ensuring they are adequately capitalized to underwrite risks and protect policyholders; Risk-Based Supervision: Consolidation of the risk-based approach to supervision, enabling regulators to more effectively monitor and manage risks within the industry; Strengthened Consumer Protection: Improved consumer protection requirements, safeguarding the interests of policyholders and promoting transparency and fairness in insurance practices; and Streamlined Regulatory Framework: An enhanced regulatory framework, providing clarity and consistency in the regulation of insurance businesses, and facilitating a more efficient and effective supervisory process.

    This achievement comes after years of operating with laws that have failed to keep pace with the country’s evolving economic landscape. Unlike other sectors that have undergone multiple phases of legislative reforms to reflect current economic realities, he noted.

  • Buhari okays insurance recap

    PRESIDENT Muhammadu Buhari on Monday approved the National Insurance Commission (NAICOM’s) directive for the  recapitalisation of the insurance firms. He urged the operators not to fight the policy.

    Represented by the Permanent Secretary, Federal Ministry of Finance, Dr Mahmud Isa-Dutse, spoke at the ongoing Insurance Industry Consultative Council’s 2019 National Insurance Conference at Transcorp Hilton Hotel, Abuja.

    He said with the recapitalization directive, it is expected that operators will be true to themselves and consider all regulation available for their continued existence.

    Buhari said insurance companies are facing many challenges in the current environment and as such, they should realise that market innovation and performance of duties such as creating good services and prompt delivery of those services to customers would facilitate the growth and development of the industry.

    He further said the Ministry of Finance will continue to collaborate with NAICOM and the industry to ensure that the target of about 40 per cent penetration rate at the end of year 2020 is achieved as contained in the 2018 revised Financial Inclusion Strategy.

    He said it is imperative to say that this is an industry target where all stakeholders will be expected to work in unison to attain.

    In this regard, he expects the various arms of the sector to support and work with the regulator to ensure the realisation of this and all set targets.

    Buhari said: “With the recapitalisation directive in the country, we expect operators to be true to themselves and consider all regulation available for their continued existence.

    “It should not include fighting the policy just because you cannot raise the required capital. Your industry should be more responsive to the economy. the industry can do more to contribute to the development of Nigerian economy, we can do more to

    “Insurance companies are now facing many challenges in the current constituted environment and as such realised that market innovation and their duty such as creating good services, prompt and delivery of those services to customers would facilitate the growth and development of the industry.

    “This administration is very excited about the recapitalisation and other reforms in the industry and asks the ministry to continue to closely monitor activities in the sector. The insurance industry issues regulations that all insurance companies must follow and this will cause them to understand and implement the new technologies and innovations that can help the sector. However, NAICOM must design ways to acknowledge changes to the existing businesses, considering that we live in a technological human age where technology enhances businesses for profit in the organisation.

    “We must also put in place strategies to mitigate and control such risks so that technology in the insurance sector can be fully realised.”

    Consequently, President Buhari raised four questions for operators at the conference to explore in order to start building the strategy for companies to adopt.

    Read Also: Just in: Buhari, Bauchi governor meet in Aso Rock

    He asked that to what extent can they use technology first of all to transform the goal structure of the business system; to what extent will it mitigate the disruption to satellite in the industry; to what extent will it give back to new value propositions and markets; and to what extent will building technology give back to the industry?

    “In possession of these question, also ponder on the Federal G overnment’s expectations of insurance companies which includes increased financial capability to enable local retention; prompt payment of claims; transparency in dealing with quotation policy holders to consumer consumer first; expansion in time consuming insurance policies to better address clients’ needs; increased numbers on outreach of specific sectors such as non-relevant segments; and expansion of the operations to cover the country.

    Commissioner for Insurance, Alhaji Mohammed Kari  said from the regulatory standpoint, the need to exploit the opportunities of digitalisation and to tame the cumulative consequence of inflation and devaluation of the naira heightened the necessity for the ongoing reforms of the insurance industry. He said expansion of the insurance distribution channels, financial inclusion, corporate governance enforcement, market discipline, professionalism and the recapitalidation exercise were aimed at strengthening insurance institutions and increasing the spread of insurance in the country.

    These  reforms are in furtherance of the  Buhari administration’s determination to revamp the economy as encapsulated in the ERGP in order to ensure that the insurance industry becomes a significant contributor to economy of Nigeria, he added.

  • Operators choose Tiers, seek capital

    Despite an order by the Lagos High Court restraining the implementation of Tier-Based Minimum Solvency Capital (TBMSC) policy by the National Insurance Commission (NAICOM), some insurance companies, Chief Executive Officers (CEOs) have indicated the Tier level they plan to operate out of the three available categories

    The CEOs, on the instruction of their boards and shareholders, are working with the regulator on the TBMSC policy plans.

    While some of the boards and shareholders have distanced themselves from the court order, they are on the other hand aggressively seeking additional capital in other to position properly to play well in either of the three Tiers categories.

    The TBMSC structure is a complementary measure to the ongoing implementation of the Risk-Based Supervision (RBS), programme. It is a three level model, which specifies capital requirement for each tier based on their respective risk classification.

    Tier-3 of the TBMSC stipulates that companies will operate on the existing minimum paid up capital of N2 billion for life, N3 billion for non-life and N5 billion for composite underwriters. Life companies will only be permitted to underwrite individual life policy, health insurance, and miscellaneous insurances.

    Non-life companies will only underwrite fire, motor, engineering (only classes covered by compulsory insurance), general accident, agriculture and miscellaneous insurances.

    To operate in tier-2 of the TBMSC, companies must have 50 per cent additional capital base. Life companies must have N3 billion capital base and will underwrite all tier-3 risks and group life assurance.

    Non-life companies must have N4.5 billion and will underwrite all tier-3 risks, as well as engineering (all inclusive), marine, bonds credit guarantee and suretyship insurances.

    For tier-1 players, companies must have 200 per cent additional  capital base. While life companies must have N6 billion capital base and will underwrite all tier-2 risks and annuity, non-life companies must have N9 billion capital base and will underwrite all tier-2 risks, as well as oil & gas, (oil related projects, exploration & production) and aviation insurances.

    In essence any composite company, that is life and non-life, that wants to be in tier-1 must have N15 billion, tier-2 must have N7.5 billion while tier-3 must have N5 billion.

    But some shareholders had on September 13, 2018 dragged the commission to court and secured a restraining order against on TBMSC structure implementation.

    Justice Hassan of the Federal High Court, sitting in Lagos, restrained the Commission from implementing the TBMSC structure until after the expiration of 30-day pre-action notice.

    The case was filed by Sir Nnamdi Nwosu and seven others  versus the NAICOM with suit number 1483 of 2018 FHC/L/CS/ 1483/18. Counsel to the plaintiffs are B. C. Igwilo, SAN and Chuks Nwachuku.

    A CEO, who spoke under the condition of anonymity, said as operators, they cannot work against their regulator.

    He said while they pray for a postponement of the implementation of the policy, it is in their best interest to continue with the processes of the policy.

     

  • NAICOM to publish names of Tier 1, 2, 3 firms in Oct.

    The National Insurance Commission (NAICOM) is planning to publish the names of insurance firms and their categories next month, The Nation has learnt.

    The publication will show the firms that will operate as Tier 1, Tier 2 and Tier 3 under the new Tier-Based Minimum Solvency Capital (TBMSC) Policy.

    The TBMSC billed to take off  on January 1, 2019 would lead to the recapitalisation and recategorisation of the 57 existing insurance firms.

    It was also learnt that the NAICOM has issued letters of advice intimating each firm on the “Solvency Assessment Status”of the companies as at December 31, 2017.

    The insurers were assessed based on approved audited accounts for the year ended December 31, 2017. The firms that wish to be categorised based on their half year 2018 accounts may submit an audited copy to the Commission   to meet the next financial year, which begins January 1, 2019.

    The policy, which was unveiled on July 25, has since sent shockwaves across the industry.

    But the Commission seems to be worried over this development.

    A source, who asked not to be identified, told The Nation that the operators did not   shore-up their capital after the last recapitalisation in 2007.

    He said many of the firms struggled to meet the minimum requirement of N2 billion for life business, N3 billion for general and N5 billion for composite in 2007, saying that many refused to boost their capital after the recapitalisation.

    He cited the banking sector 2005 recapitalisation when banks were made to increase their minimum capital to N25 billion, stating that the banks have continued to increase their capital and none of them has less than 50 billion capital base as at date.

    He said: “Our operators seem to be too docile. In 2007 the majority of them in operation struggled to meet the minimum requirement. Some waited till the last minute to recapitalise and in the process, some were bought cheaply.

    “If you look at the banks that were made to recapitalise by the Central Bank of Nigeria in 2005, they have continued to increase their capital base by themselves and today, none of them has less than N50 billion capital. So, if the CBN asks them to recapitalise, they will comfortably do so. In the case of insurance, we have been talking to them about Risk-Based Supervison (RBS) and the need for them to increase their capital to meet their primary obligation of paying claims, among otherss, since the tenure of the former Commissioner of Insurance, Fola Daniel.

    “But they refused to act and so the Commission decided to take steps to make them increase their capital or underwrite only the risk they have capacity to carry. They are all aware that RBS means simply that you can’t carry some risks like oil and gas, aviation and marine among others, if you don’t have the required capital to do so. So, there is no need for them to panic because the Commission is not forcing any of the companies to inject capital,” he added.

    The Chairman, Mutual Benefits Assurance Plc, Dr. Akin Ogunbiyi, however said that efforts by NAICOM to reposition the industry through the RBS and TBMSC could be counter-productive, anti-growth and disruptive, stating that the immediate implementation of the Tier- based rating of firm could lead to crisis of confidence in the entire industry with only about seven of the 29 firms qualifying under the new standard.

    He said it would also lead to de-listing of insurance stocks from the stock market.

    He said insurance stocks were already classified as penny stocks due to their inability to support pricing by regular dividend payments, adding that there would be hostile take-overs of the firms for peanuts, especially by foreign investors with short-term gains as focus.

     

  • Financial inclusion: NAICOM to launch NIIDP

    National Insurance Commission (NAICOM), on Monday said it has concluded plans to launch the Nigerian Insurance Industry Development Plan (NIIDP) in order to boost financial inclusion.

    The commission said it had already concluded work on the NIIDP, with KPMG, a consulting firm monitoring its implementation to ensure each segment of the market kept to date with their assigned responsibilities.

    The Commissioner for Insurance and Chief Executive Officer, NAICOM, Mohammed Kari, said this at the National Insurance Conference, in Abuja.

    The conference had ‘Insurance Industry and Financial Inclusion’ as its theme.

    He said: “The timing of this Conference could not have been more significant especially as we prepare to launch the Nigerian Insurance Industry Development Plan (NIIDP) which has Financial Inclusion as one of its major components. Work on the NIIDP has already been concluded with inputs from KPMG, consulting firms who will also independently monitor its implementation to ensure each segment of the market keep to date with their assigned responsibilities.

    “It may interest you to know that the plan has been presented to the Insurers Committee, a body comprising management of NAICOM, CEOs of insurance companies and heads of insurance trade associations and the Chartered Insurance Institute of Nigeria (CIIN) to ensure every player in the industry is on the same page with us. I commend the market committee and KPMG for the good job on the NIIDP.

    Read Also: NAICOM confirms takeover of Unic Insurance Plc

    “How the insurance sector in Nigeria could effectively and efficiently navigate this turn to increase the number of policyholders while reducing the figure of the financially excluded, is part of what the NIIDP contain.

    “The strategic initiatives and implementation plans of the NIIDP notwithstanding, we have dedicated this forum to financial inclusion for an opportunity to listen to speakers and discussants with divergent views and opinions so as to improve on what we already have.”

    NAICOM also linked high rate of poverty in Nigeria and the rest of the world to financial exclusion.

    Kari said the insurance sector plays a vital role in any economy by helping to reduce the poverty line.

    He said: “The general consensus seems to be that financial exclusion is one of the main causes of poverty in the world.

    “The insurance sector plays a vital role in all of these because it helps to reduce the poverty line, it helps entities and individuals manage their risks and protects them from negative adverse effects of unforeseeable events.

    “Commission recognizes financial inclusion as a tool for financial development and inclusive growth agenda and will therefore, continue to support the development of products that will improve the standard of living of the people and increase the role of insurance in the development and growth of the average Nigerian’s standard of living.

    He added that Nigeria launched the National Financial Inclusion Strategy (NFIS) in 2012 to reduce the percentage of adults that are excluded from financial services from 46.3 per cent in 2010 to 20 per cent by 2020.

    “The strategic goals are driven by a broad range of coordinated interventions, including simplified Know Your Customer (KYC) regulations, Agent banking, Micro insurance and Consumer Protection principles,” he added.

  • NAICOM to operators: brace for change

    Insurance operators should be prepared to face some changes and strict enforcement of regulations in the industry, the Deputy Commissioner, National Insurance Commission (NAICOM) George Onekhena has said.

    He made this known during the sendoff dinner organised by the Nigeria Insurers Association (NIA) for its immediate past Director-General, Sunday Thomas held over the weekend at Oriental Hotel, Victoria Island, Lagos.

    Thomas, who worked as a Director in NAICOM before moving to work as DG NIA was in reappointed in May  by President Muhammadu Buhari as NAICOM Deputy Commissioner, Technical.

    Onekhena further stated the future of the industry has a lot challenges as well as opportunities.

    He said the opportunities might never be actualised, if the industry does not surmount the challenges.

    He told the operators that they would need to work with the Commission to surmount the challenges facing the industry.

    He said: “Operators are doing well with the industry, but there is a lot of challenges and opportunities. I encourage us to work closely with the Commission so that the huge potential that is yet to be tapped will be fully realised. We have a bouquet of opportunities, which can also be called risk like economic, political and social risks.

    “There has been a number of foreign investors entrants into the industry. Substantially, we can say we have made progress but there is need for more to be done to ensure that rules and regulations are strictly adhered to. We expect the level of adherence by operators to improve. There has been good and dangerous competition and NAICOM as the regullator must address it.”

    Thomas said he believed he was able to contribute his quota to the development of the industry,  and would continue to do so as NAICOM Deputy Commissioner.

    He promised to leave the industry better than he met it and urge operators to cooperate with the Commission.

    “I will leave the industry better than I met it. We are in difficult times and difficult decisions will have to be taken. There is so much to be done.

    “I, on my part, will add my quota within the time that I have to work at the Commission. The industry must be better. I have seen a few things since I assumed work at NAICOM. There are some  gaps that we have to fill. There are some demands that the regulator will soon make. I appeal to operators to look at the content and work to improve the industry.”

    NIA Chairman, Eddie Efekoha said the dinner was in appreciation of Thomas who served the association meritoriously as DG from May 2010 to April, this year.

    Efekoha said given the peculiarity of the market, the role of being the chief executive of a market association is by no means an easy task.

    “It takes a high sense of service, dedication, commitment and strength of character, especially when difficult decisions have to be implemented.

    ‘’Sometimes the position of the market is at variance with your position or conviction, but it takes maturity and selflessness to jettison your view or practice for the collective good. That is the practical demonstration of servant leadership,” he added.

  • Firm holds award Thursday

    Firm holds award Thursday

    THE Nigerian Insurance and Pension (Inspen) Award  will  hold on Thursday at 11:00am at the Lagos Chamber of Commerce and Industry Conference and Exhibition Centre, Alausa Ikeja..

    A statement by the Chief Executive Officer, Inspen Media, Chuks Udo Okonta, said experts drawn from insurance and pension sectors would be on hand to proffer solution to the plights of retirees and make contributions on how to improve retirement benefits operations.

    He noted that the lead paper titled: ‘Dimensioning Retirement Benefits’ will be delivered by the Managing Director of Lancelot Ventures Limited, Mr. Adebayo Adeleke.

    Okonta said discussants were drawn from the National Insurance Commission; Nigerian Insurers Association; National Pension Commission; Lagos State Pension Commission; Nigerian Council of Registered Insurance Brokers; Pension Transition Arrangement Directorate and Pension Fund Operators Association of Nigeria.