Commissioner for Insurance, Mohammed Kari
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Chuks Udo Okonta
The National Insurance Commission (NAICOM) today released the minimum paid-up share capital policy for insurance and reinsurance companies in Nigeria, which mandates Life Insurance companies to jack-up their capital from N2 billion to N8 billion; general business operators from N3 billion to N10 billion; composite business, N5 billion to N18 billion and reinsurance, N10 billion to N20 billion.
NAICOM disclosed this in a circular signed by its Director, Policy and Regulation Directorate, Pius Agboola, and entitled: Minimum Paid-Up Share Capital Policy for Insurance and Reinsurance Companies In Nigeria, which was sent to all insurance and reinsurance companies, stressing that the circular shall apply to all insurance and reinsurance companies other than Takaful operators and microinsurance companies.
The insurance industry regulator noted that the commencement date of the circular for new applications shall be May 20, 2019, while existing insurance and reinsurance companies shall be required to fully comply not later than June 30, 2020.
“In 2005/2007, insurance industry witnessed its last recapitalisation and despite the astronomical increase in value of insured assets, consequent exposure to higher level of insured liabilities and operating cost of insurers, the same capital continued to rule in the insurance industry.
“The provision in respect of requirement of statutory deposit as stipulated in Part III, Section 10 of the Insurance Act 2003 shall apply for effective date of commencement of this circular. All insurance and reinsurance companies are required to ensure strict compliance with this circular. The commencement date of this circular shall be May 20, 2019,” the circular stated.
NAICOM had in July 2018 announced that the Tier Based Minimum Solvency Capital (TBMSC) exercise will fully take off on January 1, 2019, a deadline that some insurance operators, shareholders and other stakeholders resisted.
The decision of the regulator to later shift back the recapitalisation deadline date from January 1, 2019 to October 1, 2018, citing reinsurance treaties which is usually is done in November and December as the major reason for changing the deadline rocked the plan as some parties went to court to challenge it, hence, leading to the announcement by the Commission of the cancellation of the policy in October, 2018.
The insurance regulator in the new policy has mandated all insurance and reinsurance firms to strictly comply with the new directives.