By Emma Ujah, Abuja Bureau Chief
Abuja — President Goodluck Jonathan’s administration has wielded the big stick against the insurance sub-sector as it suspended issuance of new licences for insurance companies and stopped budgetary allocations to National Insurance Commission, NAICOM, the regulatory body of the sub-sector.
Minister of State for Finance, Dr. Yerima Ngama, announced the decisions at the inauguration of the new board of NAICOM in Abuja, yesterday.
Dr. Ngama said that any new investor interested in the sub-sector of the financial industry should buy distressed or moribund insurance companies, recapitalise and run them.
He disclosed that there were too many distressed insurance companies and that as such “local and foreign investors are encouraged to buy two or three of these distressed insurance companies, merge them, recapitalise and run them.”
He directed the new board, which has former Deputy Speaker of the House of Representatives, Chibudom Nwuche, as Chairman, not to “yield to pressure”.
He said: “We have so many insurance companies that are just on the shelf, distressed. But it is either we liquidate them or get some serious people to take them over.
“So there is no need to issue new licences when they have several licences to take over.
As it is in banking
“It is just like the banking system. If we have so many distressed banks, why should we issue a new licence to a bank? Why not buy one of the distressed ones and restructure it?
“That is why the sector does not have a single distressed bank. So the same thing with insurance. We have so many of them. Anybody that is interested in investing in them, you are welcome.”
The minister charged the new board to effectively regulate and supervise the industry, which he said needed urgent steps to reposition it to play its roles in the nation’s economy, saying “this is the last time NAICOM will get one kobo from the budget.”
He criticised operators in the industry, whom he accused of creating the current distress in most insurance companies, due to their refusal to embrace good corporate governance.
Okonjo-Iweala tasks new board
In her remarks, Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, urged Nwuche and his team to work hard at repositioning the industry, such that it could support the nation’s economy.
She said it was that desire that gave birth to a section of the members of what she described as “a strong board” with the capacity to add value to insurance business in the country.
Responding on behalf of his colleagues, Nwuche pledged to lead a board that would work assiduously to return the country’s insurance industry to its past glory and make it attractive for Nigerians to buy policies, once again.
He said that there were great potentials that could be tapped into for the industry to grow astronomically and that issues about integrity and depth would be closely looked into to revamp the sub-sector.
SEC boss reacts
In a related development, Director-General of Securities and Exchange Commission, SEC, Ms. Arunma Oteh, has called for greater attention for micro-insurance.
Speaking at the international micro-insurance conference organised by NAICOM in Abuja, she said: “What we want is for Nigerians to be able to participate in the economy and I believe that micro-insurance is absolutely essential in that regard.
“If we do not focus on micro-insurance, we will not transform our society.”
She said that a stronger insurance industry in the country would translate to a stronger capital market, which would also rob off on other sectors of the economy.