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Chuks Udo Okonta
In spite the cancellation of the Tier Based Minimum Solvency Capital (TBMSC), most insurance companies will still lose businesses they used to underwrite as policyholders seemed poised to transfer their risks to underwriting firms with requisite capital base.
The President, Chartered Insurance Institute of Nigeria (CIIN) and Managing Director, Consolidated Hallmark Insurance Plc, Eddie Efekoha, who spoke recently at the 2018 End of the Year workshop organised by the National Association of Insurance and Pension Correspondents (NAIPCO) in Lagos, stated that there is a particular transaction in Exxon Mobil for several years that never respected the N3 billion capitalisation, adding that operators whose capital were within this minimum were excluded from the business.
He noted that recently he was told of a broker, who said his client had informed him not to place risks with any underwriting firm with less than N9 billion as proposed in the cancelled TBMSC policy.
Efekoha posited that with such developments, it is now immaterial whether the industry regulator withdraws the TBMSC policy, adding that the policy has opened the eyes of insurance consumers.
“What I heard from our office recently was that there is a broker that said that my client has already seen that N9 billion is what is required, so please go and shore up. It is immaterial whether the commission has withdrawn from the TBMSC or not. Of course we are all here in this market, there is a particular transaction in Exxon Mobil for several years that never respected the N3 billion capitalization and to that extent some of us whose capital were not up to that minimum were excluded.
“Of course it is equally a public knowledge that even Dangote for several years did not select underwriters based on the authorized capitalisation by NAICOM. So for clients to begin agitate, it means that the commission and all of us have whet the appetite of the consumer. So things have to change. I want to thank the commission for seeking the wisdom to suspend or cancel TBMSC,” he said.
He noted that the Commission never said the TBMSC was a recapitalisation, stressing that whatever meaning NAICOM gave, was considered differently by operators and that the initiative was a wakeup call for operators to do certain things.
“Thanks to the commission because sometime we ignore some certain things that we should do and focus on less important things. The issue of TBMSC has brought about a reawakening in some of us who were already sleeping at that time; that we must do something in order to help our situation,” he said.
Efekoha said he is a major beneficiary of the TBMSC, adding that this is because sometimes in a board room, managers do have challenges in getting some policies through. “Some of us needed external force to convince those we work with that there is need to push capital because we Nigerians are fond of looking at our holding control. So, I think that to some of us, it was a motivation. I was part of those who were sleeping, and the commission has reawakened us,” he said.