By Patience Saghana
Strong indications emerged last week that the federal government might be contemplating reducing the present number of insurance companies in the country from 49 to 15 underwriters.
The reduction in the number of insurers in the country, according to industry sources would increase the capacity of the industry and also ameliorate the incidences of unethical business practices as a result of unhealthy competition among insurers.
Financial Vanguard source at the Ministry of Finance said the federal government is considering further reduction in the number of insurance companies in the country.
Alhaji Anwalu Muktari, Managing Director of Fin Insurance in an interview with Financial Vanguard, shared in the likelihood of more reduction in the insurance sector, more so, as it going to increase capacity of the sector.
According to him, â€œReduction in the number of insurance companies operating on this country is a welcome idea. It will help to increase and enhance capacity of the industry.
The new Central Bank Governor, Lamido Sanusi has mentioned something in that line and he has already set up a committee in that direction. And once that is achieve in the banks, insurance industry will follow suit because we are in the same financial sector.
â€œIf GTB, Fin Bank, Oceanic Bank and Zenith bank decided to merger today, definitely their insurance companies will be left with no choice than to merge as well. About 50 per cent of insurance companies in the industry today are owned by banks. And if we are talking about reducing the number of banks, then the number of insurance companies will sure be reduced as wellâ€.
Reduction in the number of insurance companies operating in Nigeria may very well follow the pattern in Egypt.
Dr Adel Rabeh, Chairman, Egyptian Insurance Supervisory Authority who was in Nigerian on the invitation of Africa Reinsurance Corporation said that number of insurance companies operating in that country (public and private sector) are 18 in all.
Rabeh also stated that plans are underway to merge regulatory authorities in the financial sector of Egypt, comprising insurance, banks and capital market in order to become one strong financial regulator.
With the number of insurance companies operating in that country, Rabeh said the sector would be easy to regulate and monitor.
Mr. Remi Babalola, Minister of State for Finance at the 31st Annual General Meeting of Africa Reinsurance Corporation in Abuja recently said the insurance laws are being reviewed so as to quicken the growth of the sector.
â€œOur laws and regulations are currently being reviewed with a view to facilitating a more effective and conducive environment for the rapid growth and development of the sectorâ€
Besides, Mr. Sanusi Lamido Sanusi, Central Bank of Nigeria Governor projected further consolidation that would reduce the current number of banks from 24 to about 15, but noted that it would not be proper to do the reduction by fiat.
Sanusi, however, said that â€œit will be very unwise to increase the number of banks when we should be considering strengthening and building the 23 in existence, adding it should be noted that while a good bank requires a lot of money, it must be understood that not all banks with lots of money are good while some with small money are good