The National Insurance Commission (NAICOM) on Friday confirmed that the deadline for insurance companies Tier-based recapitalisation had been put at October 1 this year, as against the January 1, 2019 it earlier announced.
The commission’s spokesman, Mr Rasaaq Salami, made the confirmation in Lagos, thereby dousing speculations by some industry operators on the adjournment of the recapitalisation date.
He explained that it became imperative for the industry regulator to shift the date in order to re-position the industry for improved performance in the nation’s financial sector.
He said: “The back dating means that operators only have one month and two days to recapitalize. The commission would not withdraw any license but only ensure that an underwriter has adequate capital to absorb risks.’’
The commission spokesperson recalled that after the commission issued the first guidelines on recapitalisation implementation in July, the government, through the commission, issued a new circular dated Aug. 14.
According to him, the circular mandated all insurance companies to recapitalise and communicate to NAICOM the tier they intended to play in before October 1, pointing out that only operators that meet the respective tier requirements shall carry on new businesses in those categories as from the October 1 deadline.
He clarified further on the circular thus: “Companies shall be assessed, in the first instance, on their approved financial statement for 2017, and audited half year account for 2018.
Salami explained: “However, where a company is yet to obtain approval for its 2017 financial statement, its last approved audited accounts will be used for the assessment.”
It would be recalled the new requirements as set out by NAICOM indicate that underwriters interested to play in the tier 1 category are expected to increase their capitalisation from N5 billion to N15 billion while those interested in the same tier but currently operating Life business are mandated to upgrade their capital base from N2 billion to N6 billion.
In addition, the Non-Life Insurers that wanted to play in the tier are expected to increase their capitalisation from N3 billion to N9 billion just as composite insurers willing to operate in tier 2 are expected to increase their capitalisation to N7.5 billion.
Also, Life Operators under tier 2 category are expected to increase capitalisation to N3 billion.
However, insurers willing to play in the lowest tier, which is tier 3, are expected to maintain the current capital base of the insurance industry.
Non-Life Insurance Firms in tier 3 is to maintain N3 billion; Life Insurance Operators to maintain N2 billion and Composite Insurers are to maintain N5 billion capitalisation.
