By ROSEMARY ONUOHA

Shareholders of insurance shares have called on insurance companies to come together to lobby Nigerian legislators to amend the law on statutory deposit which compels insurance companies to deposit 10 per cent of their capital base with the Central Bank of Nigeria (CBN).

The shareholders are of the view that the money is lying fallow in the vaults of the CBN and would be useful if the law is amended and the money allowed to be ploughed back into the businesses of insurance companies.

Insurance and reinsurance companies are statutorily required to deposit 10 per cent of their capital base as reserve with the CBN. This money cannot be withdrawn by the insurer unless it is in the process of liquidation.

Speaking on behalf of shareholders in Lagos, Mr. Sunny Nwosu, president of the Nigerian Shareholders Solidarity Association (NSSA) lamented that the financial crisis affected the insurance industry adversely as such there should be a legislation that should allow operators in the sector to use the statutory deposit to run their businesses.

It will be recalled that insurance operators have called on the CBN to help them talk to legislators to create a legislation which will enable them withdraw the money so as to plough it back into their businesses.

Chairman of the Nigerian Insurers Association (NIA) and managing director of Lasaco Assurance Plc, Mr. Olusola Ladipo-Ajayi, maintained that the CBN should initiate the process for the money to be released to insurers.

Ladipo-Ajayi stated that while the process of lobbying legislators is ongoing, the CBN should raise the interest rate payable on their statutory deposit to put them in a better position to pay higher returns on investments to their shareholders and promptly meet their obligations to policyholders.

Currently, the CBN according to the aggrieved operators pays a paltry 3.5 per cent interest on insurers’ statutory deposit with it while the Minimum Rediscount Rate (MRR) which the CBN pays for deposits by any commercial bank is far above this level.

Ladipo-Ajayi reasoned that the deposit with the apex bank should also attract in the least the MRR, adding that if the CBN wants to be fair to the insurers, it pay them a higher rate than the MRR in view of the fact that these deposits has no maturity date.

“The length of time of the deposit should affect the interest rate more positively,” he stressed.

The NIA Chairman recalled that banks make similar deposits with the CBN before they are licensed to commence operations and the apex bank returns the deposit to them to plough back into their business after the process.

Chief executive officer of Guaranty Trust Assurance Plc Mrs. Yetunde Ilori stated that insurance operators should be allowed to give out the money as loan for the financing of infrastructural projects in the country just as the banks are allowed to do.

Mr. Sunny Adeda, president of the Chartered Insurance Institute of Nigeria also appealed to the CBN to make the fund available to insurers so that their operations will be boosted.