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Chuks Udo Okonta
The Commissioner for Insurance, Mohammed Kari, has attributed the delay in takeoff of proposed insurance industry’s capital verification to execution of other projects by the National Insurance Commission (NAICOM).
He told Inspen that the commission has internally set up project team to execute the program, stressing that the team has been inaugurated and that it will be kickstarting the project very soon.
“Times fixed for these things could be flexible depending on what other projects that dovetail into another. But definitely, that is something we must do to be able to establish the strength and wherewithal of operators.
“You know that would be the first step to determining minimum capital requirement of Risk-Based Supervision (RBS),” he stated.
NAICOM had maintained that in a bid to protect policyholders and beneficiaries of insurance contracts against unexpected losses of Insurance Companies, it will undertake a verification of the Capital resources of all Insurance Companies in the first quarter of 2017.
It said the level of expenses of some Insurance Institutions is becoming a cause for concern, hence, it will pay more detailed attention to reasonableness of management expenses to ensure that each Company’s level of expense is appropriate for its business model and does not adversely affect its profitability, liquidity and capital adequacy.
According to NAICOM, since the last recapitalisation exercise in 2007, the business environments and the risk profile of all Insurance Institutions have changed.
The commission had also enjoined boards of insurance firms to ensure fairness in valuation of assets and liabilities of their Companies when presenting the Financial Statements for the year ending 31 December, 2016.
It also urged all Professionals that participate in the financial reporting supply chain to ensure their duties in the valuation of assets and liabilities and issuance of opinion on financial reports are discharged creditably in accordance with relevant laws and professional standards.
Checks by Inspenonline revealed that the shareholders’ funds of seven firms are presently below statutory capital requirement, whilst those of 10 others, are slightly above required capital base.
In the last insurance industry recapitalisation, Non Life insurance firms were mandated to raised their shareholders’ fund to N3 billion; Life Insurance operators, N2 billion, Composite N5 billion and Reinsurance N10 billion.
