The tug of war between the insurance regulator – National Insurance Commission (NAICOM) and the underwriting firms in the lingering recapitalization impasse in the insurance industry may hopefully be resolved when the Consolidated Insurance Bill now undergoing legislative process in the National Assembly is passed into law.
However, one of the Directors at the seminar told AssurPen Online that the Commission still had the upper hand as regulator of the industry because the Bill aligned with the suspended recapitalization templet of N8 billion, N10 billion and N18 billion earlier initiated by the Commission.
Besides, the licensing of five new underwriting firms and one reinsurance company was based on the agreement of promoters of the new insurance companies based on the new regulatory requirements on recapitalization before they were issued with certificate of registration.
It will be recalled that the Commission had felt that the current recapitalization templet of N2 billion for life business, N3 billion for general business, N5 billion for composite, and N10 billion for reinsurance companies was grossly inadequate to operate efficiently in the present economic environment, hence the need for the industry to recapitalize to meet obligations to customers.
According to the commission, the capital benchmark is going to be risk-based, implying that the level of risk appetite will determine the level of capitalization even though N8 billion, N10 billion and N18 billion will be the minimum Capital requirement in the industry.
During a yearly seminar organized by the Commission for Insurance Journalist in Lagos at the weekend, the Director of Supervision of the Commission, Barineka Tbompson confirmed that the Commission is awaiting the passage of the Bill into law to empower the commission to determine the solvency capital for insurance companies. He explained that in the future, the industry would be operating on risk-based supervision capital, specifically there would still be minimum capital requirement for the industry.
Similarly, the commissioner for insurance/Ceo, NAICOM, Mr. Sunday Thomas, said, the commission is working assiduously with the National Assembly to ensure that the consolidated insurance bills is passed into law, adding that, he, alongside other directors of the commission will, this week, engage the House committee on Insurance and Actuarial Matter to look at the bill draft emanating from the recently held public hearing on the bill.
“ We will have engagement with the National Assembly to look at the insurance bill draft. The committee is currently working on harmonizing the stakeholders’ views to ensure the industry have a holistic document by the time the bill becomes law and we are working closely with them on this,” he pointed out.
He added that the industry, going forward, will commence implementation of the IFRS 17 under the Risk Based Supervision in the next one to two months as staff of the commission have been trained on this.