Leave a comment and share
Chuks Udo Okonta
As the National Insurance Commission (NAICOM) plans to move to the next phase of implementation of the Risk-Based Supervision (RBS) which is determining the capital requirements for underwriting risks, 16 firms which shareholders’ funds are below or slightly above the statutory capital may lose some businesses they are presently underwriting.
To remain afloat, some of the firms are already scrambling for funds to enable them remain relevant in the emerging underwriting practice.
Inspenonline gathered that NAICOM having ran a prototype of the initiative with 20 selected firms, would soon release guidelines that state the capital requirements for all underwriting business.
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.
Information obtained from companies websites and the Nigerian Insurers Association (NIA) in its Nigeria Insurance Digest showed that: Standard Alliance Insurance Plc, operating composite structure has N4.65 billion as against N5 billion; ARM Life Plc, had N1.74 billion; Goldlink Insurance Plc, N-3.90 billion; International Energy Insurance Plc, N-2.12 billion; Investment and Allied Insurance Plc, N-955.25 million; Guinea Insurance Plc, N2.89 billion and SpringLife Assurance Plc, N-351.12 million.
Companies that are slightly operating above the required fund include: Staco Insurance Plc, N3.8 billion; UNIC Insurance Plc, N2.70 billion; Wapic Life assurance Limited, N2.55 billion; Royal Exchange Prudential Life Plc, N2.31 billion; Capital Express Assurance Limited, N2.07 billion and Alliance & General Life Assurance Plc, N2.74 billion.
According to the Commissioner for Insurance, Mohammed Kari, the new phase of underwriting would distinguish big and fringe players
“Our legislation had structured the industry into life, general and miscellaneous. So, if you are licenced to do general, it means that with N3 billion you can attempt to insure petroleum refinery or you can claim the right to insure an Airline, which is not right if you look at the foundation of insurance.
“This is because, to be able to hold a risk, you must have enough asset base to cover the risk. So, risk based is being able to identify what is your financial capability. If your financial capability does not guarantee you to insure oil refinery or airline, you would not be allowed to do so.
“Your financial ability may be to insure a Keke NAPEP, then you would be a specialist in Keke NAPEP insurance. That is what risk based is going to be. It is going to first of all require that we review and see whether the minimum capital requirement is adequate. If it is not, we would require additional capital to meet that minimum. But if it is okay, we would just require the classification of companies’ assets plus the extra needed to get into the class of business one wants to undertake,” he said.
