The expectations of shareholders of some underwriting firms in the nation’s insurance industry to stop the new recapitalization plan initiated by the National Insurance Commission (NAICOM), may have lost the struggle as the 2020 Consolidated Insurance Bill has endorsed the regulator’s option to consolidate and strengthen the market.
Consequently, when the Consolidated Insurance Bill is signed into law, operators of the risk business have no option but to raise their capital base to N8 billion for life offices; N10 billion for non-life business; and N20 billion for reinsurance business.
Extract from the Bill revealed that no insurer shall carry on insurance business in Nigeria unless the insurer has and maintained, while carrying on that business, a paid-up share capital of; not less than N8 billion for life insurance business; non-life insurance, not less than N10 billion and reinsurance business, not less than N20 billion.
“The paid-up share capital stipulated in subsection (1) of this section in the case of existing insurer shall come into force on the expiration of a period of 9 months from the date of commencement of this Bill;” the bill reads.
However, although the Nigerian Insurers Association (NIA) the umbrella body for the underwriting firms had declared its preference for risk-based capital structure and asked the National Assembly to infused and promote it in the Insurance Industry consolidated bill.
“Schedule V of the bill fail to give much attention to risk-based capital which the Nigerian Insurers Association (NIA) is seeking as the suitable capital structure for the sector. The bill only empowers the National Insurance Commission (NAICOM) to from time-to-time determine the risk-based requirements for the industry.”
When the Bill is eventually signed into law in line with this proposal, it will lay to rest, the contentious issue of the definition of capital which has been a major point of the Association’s engagements with the Commission during the ongoing recapitalization exercise.