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Chuks Udo Okonta
An aggrieved group has accused the Commissioner for Insurance, Mohammed Kari of using the Tier-Based Minimum Solvency Capital (TBMSC) policy to court Federal Government’s favour in renewing his tenure as the helmsman of the National Insurance Commission (NAICOM) and insurance industry regulator.
The Leader of the Group told Inspenonline that there is no basis for the TBMSC as underwriters do not need huge capital to carry out their operations, adding that the Commissioner embarked on the project to pursue his second term agenda of remaining as the regulator of the industry.
He noted that if the TBMSC is allowed to sail through, the government would not like to distort the process, hence, would allow the commissioner to see it through, making it easy for Kari to secure his second term agenda.
According to him, Nigeria insurance industry presently has the highest capital base across Africa, therefore, raising the minimum solvency capital is not necessary. He added that underwriters could take any risks provided there is adequate reinsurance treaty.
He called on NAICOM to regulate the industry with human face, stressing that the TBMSC would create monopoly in the industry as mega firms would take control of all businesses in the market leaving smaller firms with little or nothing.
In the new Tier-Based regime proposed by NAICOM, companies will be classified based on their 2017 financial accounts. In this vein, Tier 3 companies are those that falls within existing paid up capitals of N2 billion for life business; N3 billion for non-life business and N5 billion for composite business.
Companies in this category will be limited to underwrite only risks in life business in the following areas – Individual Life, Health Insurance, Miscellaneous Insurances; while for non-life they will be limited to underwrite risks in these areas – Fire, Motor, General Accident, Engineering (only classes covered by compulsory insurance), Agriculture and Miscellaneous Insurances. Tier 2 companies are those whose paid up capital has increased by 50 percent above the existing minimum capital.
For life business, their paid up capital will be N3 billion and they are to underwrite all Tier 3 risks and Group Life Assurance (GLA); while for non-life, their paid –up capital base will be N4.5 billion and they will underwrite all Tier 3 risks, Engineering (All inclusive), Marine, Bonds Credit Guarantee and Suretyship Insurances.
Tier 1 companies are those whose paid up capital has increased by 200 percent, above the existing minimum requirement. Life companies in this category will have capital of N6 billion, and will underwrite all Tier 2 risks and Annuity. While for non-life business, the paid up capital will be N9 billion, and will underwrite all Tier 2 risks and Oil & Gas (oil related projects, exploration & production), and Aviation Insurances.
Composite companies in Tier3 will maintain N5 billion; Trier 2 N7.5 billion and Tier 1 will have N15 billion.