…NAICOM says compliance level at 90 percent
…Coronation advocate adoption of technology
By Elizabeth Adegbesan & Cynthia Alo
As the recapitalisation of insurance sector continues, the Nigerian Insurance Association has call for enactment of laws that will protect the local insurers from complete take over by foreign players.
In May 2019, the National Insurance Commission (NAICOM) issued a circular to all insurance and reinsurance companies announcing the upward review of the minimum paid up share capital requirement of insurance and re-insurance companies.
Speaking at the Nigerian Stock Exchange (NSE) Insurance Sector Forum organized by NSE in collaboration with Coronation Merchant Bank and Cordros Capital, in Lagos, Director General, NIA, Mrs. Yetunde Ilori said: “We need to change our business models, we need to look at how we can make money , and this would include cutting costs .
“My concern is that Recapitalization has opened door to more foreign players and investors as such, I also want to seek policies protecting the local investors such that we are not back to the days we call investititization . You know that with foreigners coming in especially the ones doing insurance in different countries, they bring in their technical capabilities , building capacity and all sorts of manners of aggressive services but at the same time there has to be policies in place that will not kill the local investors.”
Speaking on the compliance level of insurance companies on recapitalization, the Acting Commissioner, NAICOM, Sunday Thomas represented by Director, Policy and Regulation, NAICOM, Pius Agboola said : ”The compliance level is above 90 percent base on what we have at hand presently . we have asked the insurance companies to submit their plans and they have submitted it and about 20 percent of them is okay.”
According to the Chief Executive Officer, NSE, Oscar Onyema, “An estimated capital of N200 billion is expected to be injected into the Nigerian Insurance Industry post recapitalization with a 400 percent increase in the minimum capital required for life, 332 percent for non-life, 360 percent for composite and 200 percent for re-insurance.”
He said: “While I am optimistic that this guarantee by the industry regulated will enhance performance, efficiency, innovation and profitability the industry needs significant support to unleash its growth potential and at the NSE we see close parallels between this recapitalization and that of the banking sector in 2005. The mass growth seen in the banking sector can be attributed to successful capital raise through the capital market.”
On his part, the Head Research, Coronation Merchant bank, Guy Czartoryski said the Insurance industry has not grown in real terms saying that the application of technology aqnd partnership of regulators in the sector will enhance growth.
He said: “The Nigerian Insurance Industry has not grown in real terms in 10 years. Insurance penetration stands at 0.3 percent compared with India (similar GDP per capital) at 3.69 percent. Without growth and without scale the average return on equity is low. So the question is how does the industry join the growth track? The application of Partnership and technology will enhance growth in the sector. There are now 38.5 million Bank Verification Numbers (BVNs0 in Nigeria which is not a bad start for bancassurance. There are 172.9 million SIMs. This is not a bad start for distributing insurance telcos. The technology that transformed the banking sector can be applied to the insurance industry from tens of thousands to tens of millions of customers.
“Growth requires the coordination of the telecom regular (Nigerian Communications Commission), the banking regulator, (Central Bank of Nigeria) and NAICOM for good measure, we add the development Finance Institutions (DFIs) that are keen to see micro insurance succeed.”