Shareholders have commended the National Insurance Commission (NAICOM) over the cancellation of the Tier Based Solvency Capital recapitalisation.
The shareholders under the aegis of the Independent Shareholders Association of Nigeria (ISAN) said the cancellation of the recapitalisation bid by NAICOM was a welcome development and a sign of respect for the rule of law.
Mr Moses Igbrude, ISAN Publicity Secretary, said in Lagos that it was a welcome development that the regulator toed the path of law.
NAICOM on Nov. 23 announced the cancellation of the Tier Based Solvency Capital policy for the underwriting sector with immediate effect.
The commission gave this notice in a circular to all insurance companies on ‘Withdrawal of circular on Tier Based Solvency Capital policy for insurance companies in Nigeria,’ signed by the Director, NAICOM, Mr Agboola Pius, on Friday.
It will be recalled that recently, NAICOM announced a raise in the minimum capital base for life, non-life and composite insurance companies seeking licences to underwrite all risks in Nigeria.
The companies required from N2 billion, N3 billion and N5 billion to N6 billion, N9 billion and N15 billon, respectively under the tier-based minimum solvency capital structure.
It later announced an Oct. 1, 2018 deadline, which was not accepted by stakeholders, pushing them to take a legal action against the commission.
Igbrude said the shareholders were not against insurance recapitalisation but rather not comfortable with the short period of time NAICOM gave them for the exercise.
He said the shareholders were worried by the way and manner NAICOM changed the recapitalisation deadline from January 2019 to October 2018.
“The way they suddenly brought the day backward from January 2019 to October 2018 raised our suspicious to whether some cabal in the sector wants to corner insurance business through such a sudden and drastic action,” Igbrude said.
He said shareholders appreciated NAICOM’s efforts and eagerness to strengthen the operators’ capital base.
Igbrude urged the regulator to carry all stakeholders along through proper engagement and enlightenment to ensure mutual understanding for the benefit of the industry in particular and the economy in general.
“I sincerely advise the insurance companies to make hay while the sun shines because this opportunity will not last so long.
“All the insurance companies concerned should do their best to recapitalise as soon as possible to various categories they want to operate within the sector,” Igbrude stated.
However, Mr Sola Oni, a chartered stockbroker and Chief Executive Officer, Sofunix Investment and Communications, said illiquidity nurtured by customers’ apathy had made life difficult for insurance companies.
Oni said multinational companies in the oil and gas prefered offshore underwriters to carry their risk as against local ones who were defaulting steadily in settlement of claims and finding it difficult to mobilise premium.
“The court action which prompted NAICOM to suspend its tier-based solvency policy shall eventually be on the front burner.
“There is no quick fix that can provide financial succor for our ailing insurance firms outside the wall of outright recapitalisation or through mergers and acquisition in the final analysis.
“The earlier they accept the hard reality, the better,” Oni said.