By Cynthia Alo
Insurance underwriters have said that the extension of the recapitalisation exercise by the National Insurance Commission, NAICOM, will allow them explore other means of raising funds to shore up their capitals.
According to the underwriters, this will not only give them room to explore untapped means of raising funds but create deeper understanding of the benefit of the exercise.
NAICOM had in a circular dated December 30, 2019, and signed by Director, Policy and Regulations, Mr. Pius Agboola, announced a six months extension of the recapitalisation deadline to December 31, 2020.
The Commission said the need for the extension came after it reviewed the recapitalisation plans submitted by operators, the various levels of compliance observed, and the inputs noted from various engagements with relevant stakeholders.
Commenting on the development, Chief Executive Officer, Veritas Kapital Assurance Plc, Mr. Kenneth Egbaran expressed confidence that the extension will avail the underwriters, room to explore other means of increasing their funds.
Egbaran told Vanguard that, it is imperative to note that the present economy makes it hard to raise funds and as such the regulators have done the right thing in postponing the deadline.
He said: “You are aware of what is going on in the capital market, so the Commission has done well in extending the deadline as this would give the underwriters room to explore other means of raising funds. It is the state of the economy that determines how the capitals are raised otherwise the alternative is to look outside and that will mean bringing in foreign investors but primarily the capital is expected to be raised from the local economy except we are expecting a take over from foreign investors.”
In the same light, Managing Director, Old Mutual General Insurance Company Nigeria Limited, Mr. Olalekan Oyinlade, said, “The end of the year pronouncement on the extension of deadline recapitalization would allow various underwriters a bit of more time to ensure that the benefit of the recapitalization is not negated.”
In a chat with Vanguard, a top official of AIICO who pleaded to remain anonymous said that the extension will allow other insurance companies to further perfect their record and get funds from their investors to meet up with the new requirement which is of huge benefit to the industry.
According to him, many people believe that extending the recapitalization will negate the real sense of the exercise, adding, “I don’t see it being swept under the carpet like others believe because this will help other companies meet up with the recapitalization requirement.
He stated that those in view that the extension will be unrealizable are those that believe that the initial request for the recapitalization was politically motivated adding, “if it is borne out of the need for sanity and sanctity of the industry, it will be executed and it will be seen through by the industry authorities.
However, an insurance specialist and former head of retail business at Cornerstone Insurance, Mr. Ekeret Glam-Ikon opined that rather than extending the deadline, the Commission should pronounce the names of those ready for the exercise and go ahead with them in the interest of the policyholders.
According to him, some companies are ready for the recapitalisation while some will never be ready no matter how long the Commission decides to stretch the exercise.
He warned that this act could make a lot of the underwriters who are not paying claims to further delay in claims payment while the policyholders could decide to invest in other opportunities.”