By Rosemary Onuoha
As fallout of the modified universal banking in the country, the National Insurance Commission (NAICOM) said it is ready to provide guidance to banks that have insurance subsidiaries in their Holding Company structure.
NAICOM said the move is necessary because many banks are yet to understand what the Holding Company arrangement is all about.
It will be recalled that the CBN modified the universal banking in the country but gave banks the option to run a Holding Company structure if they so desires.
The Commissioner for Insurance, Mr. Fola Daniel who gave this hint in Lagos noted that the Holding Company arrangement is one of the options given by the Central Bank of Nigeria (CBN), but it is not clear cut yet.
In his words “I know two banks that are looking at this Holding Company arrangement but they don’t even know how it will play out. So, it is a shot in the dark, that is why it is important for us to have the divestment committee to look at all these options. So if any banking institution wants to go the holding company way, we can provide guidance based on experience here and elsewhere.”
He called the Holding Company arrangement a shot in the dark, stating “Even the banks that are telling you that they want to exercise this option, can’t give a clear cut description of what it is all about. So it is an experiment. The author of this holding company is the CBN, so I think the central bank will have a clear understanding of what it is. The recipient which is the banking industry that have received this directive, don’t seem to understand it very well.”
Daniel noted that their lack of understanding of the concept may not be a serious problem, stating “They still have one year to go, so there is enough time to navigate, understand and make it work well. What is important to me as a regulator is that divestment from these insurance institutions should not leave the company dead.”
On the future of the insurance industry, the insurance regulator noted “I see a stronger insurance industry emerging because this divestment is not just open to local business people. International guys have been making enquires that they want to come into the Nigerian market. Nigeria depicts a potentially large insurance market on account of our population.
With a population of about 150 million, at least the raw material for selling insurance or for insurance to thrive really is the population which we have in abundance. So Nigeria is a good insurance destination. So we have been having enquiries from foreign investors who want to invest.
And in the last two years, I have been inundated with requests from foreign investors who want to do business here and I have been saying to them, no there are too many insurance companies as far as I am concern, judging by the level of insurance activities. And that they should rather come and invest in an existing company.