…Says Insurers’ Recapitalization Claims Yet To Be Verified
The National Insurance Commission (NAICOM) on Wednesday maintained that it would not extend the deadline for recapitalisation of insurance companies in the country.
The National Commissioner for Insurance and Chief Executive of the NAICOM, Mr. Olusegun Ayo Omosehin, who gave this hint during an interactive session with Insurance journalists in Abuja, said that based on all assessment parameters any serious risk underwriting company in the industry should be able to meet the July 31, 2025 recapitalization deadline.
The NAICOM boss, who was represented at the forum by the Deputy Commissioner for Insurance (Technical), Dr. Usman Jankara, said that the deadline was set based on the provision of the Nigeria Insurance Industry Reform Act (NIIRA) 2025 and therefore cannot be changed by the Commission as doing so would require the National Assembly to amend the Act.
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Omosehin clarified: “Recapitalisation deadline will not be extended. It is in the law; it is not a journey we are willing to embark upon. Serious players should be able to meet the deadline.
“Recapitalisation will draw funds into the industry. The more funds in the industry, the more you will take the operators serious. The exercise will bring new insurance companies that are viable and able to add value for Nigerians.
“The essence of capitalization is to force entities to raise additional funds. One of the easiest mechanisms for raising funds is through the Nigerian Stock Exchange. We have a very clear roadmap as to how to facilitate this. We have gotten assurances from the SEC to the effect that rather than having to wait for three months, they are able to conclude the request to raise funds within a short period of less than a week. So, for us, that is a good thing”, he added.
According to him, one of the reasons for the industry’s recapitalization is the fall in the exchange value of the national currency as inflation has made a mess of the old N2.5 billion and N5 billion minimum capital requirements for entities.
The industry regulator explained: “Today, N2 billion is less than $2 million. So, that was the narrative. It was not that it will impact it. It won’t and what has been done is to draw capital to the sector and we think that beyond having companies recapitalized is the fact that we are going to have more serious players in the insurance industry.
“The weak ones that are the marginal players that have created some of the even challenges that we have, may probably not be able to meet or they will be forced to merge. And once you merge, the more your commitment financially, the more serious you take those entities. And so that was the point we made,” he added.
While responding to a question on the recapitalization claims by some insurance companies so far, Omosehin said that the Commission had yet to verify any recapitalisation claims by insurance companies, adding however that processes are ongoing to that with a view to determining the veracity or otherwise of such claims by the companies .
He also spoke on the benefits of the proposed Insurance Policy Owners Protection Fund to the industry such as increasing confidence in the industry and the contributions of the insurance sector to the nation’s Gross Domestic Product (GDP) if created.
Reacting to a media enquiry on how the insurers are feeling about the creation of the Fund, the NAICOM pointed out that since there had not been any complaints from industry players, it showed that they are happy with the initiative.
He further expatiated: “Now, there is a price to pay for stability. And I’ll give you an example. If the industry comes to you to say they want to insure your vehicle that is worth N1 billion.
“But on the back of those billions of Naira is their capital gains and they then tell you that beyond that N25 billion, we also have an insurance industry protection fund that is now N100 billion. And in the event that the company that is marketing insurance to you goes under, that fund is there to take care of that.
“I am sure it will increase policy owners’ confidence and uptake. Because what gives insurance the wrong perception is entities that have gone underground and have not been able to meet that. And so, we’re trying to cure a more fundamental crisis in the market by that.
“I am sure if you engage with the market, they are quite happy with that. There’s been some engagement and agreement has been reached. So, we have actually done a guideline for that that has been exposed to the market”, the NAICOM added.
