Shareholders in the insurance industry on Tuesday expressed worry over the new minimum capital base set for Insurance and Reinsurance companies by the National Insurance Commission (NAICOM).
The shareholders spoke with newsmen on sidelines of the Consolidated Hallmark Insurance Plc Annual General Meeting (AGM) in Lagos.
NAN reports that NAICOM had on May 20, in its Circular NAICOM/DPR/CIR/25/ 2019, by the Director of Policy and Regulation Directorate, Mr Pius Agboola, set new minimum capital requirements for insurance companies.
Agboola said the new minimum capital base for companies operating life business was reviewed upward to N8 billion from the existing N2 billion minimum capital base.
“The new minimum capital base for companies operating general business is reviewed to N10 billion from the existing N3 billion minimum capital base.
“The new minimum capital base for Composite Insurance Companies is reviewed to N18 billion from the existing N5 billion minimum capital base.
“The new minimum capital base for Reinsurance companies is reviewed to N20 billion from the existing N10 billion minimum capital base.
“Existing insurance and Reinsurance companies shall be required to fully comply not later than June 30, 2020,” he said.
In his reactions, the Founder, Independent Shareholders Association of Nigeria (ISAN), Mr Sunday Nwosu, urged the insurance associations to dialogue with NAICOM to prevent the collapse of insurance companies because of the review.
Nwosu said: “I was sad when I heard the new minimum capital base review for insurance companies.
“The commission should have engaged shareholders in dialogue before coming out with such review.
“We own most companies, and based on our investments in them, this is not the time to increase the minimum capital base for insurance companies.
“I call on the Nigerian Insurers Association (NIA), Nigerian Council of Registered Insurance Brokers (NCRIB), Chartered Insurance Institute of Nigeria (CIIN), Institute of Loss Adjusters’ of Nigeria (ILAN) and Association of Registered Insurance Agents of Nigeria (ARIAN)to quickly intervene.’’
Also, the National Chairman of Dynamic Shareholders Association of Nigeria, Pastor Adio Alex, urged NAICOM to extend the June 30, 2020 deadline given to operators to shore-up their minimum capital base.
Adio said, “The review seems so sudden; it may be hard for some companies to meet the requirements.”
Commenting, the Chairman, Rock Shareholders Association, Mr Peter Eyanuku, urged NAICOM to seek for alternative ways of making the industry more robust than increasing the minimum capital base.
“NAICOM can bring more funds to insurance industry by enforcing the `No Premium, No Cover Policy,” Eyanuku said.
Also, Lawrence Oguntoye, a member of Distinct Shareholders’ Association, said that the new requirements might retard the growth of the industry.
Oguntoye said: “We are not in support of NAICOM’s new policy on minimum capital requirements in view of the country’s economic condition.
“Besides, such policy will discourage indigenous companies from springing up.”