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NAICOM To Issue Fresh Insurance Licences In 2019

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The National Insurance Commission (NAICOM) will grant new licences to serious investors willing to float Tier 1 underwriting companies in the country, LEADERSHIP can now reveal.

The commission had, in the last 10 years, placed embargo on issuance of fresh licenses, advising, intending investors to buy into the existing ones.

However, with its three -tier based recapitalisation of  the insurance industry, expected to fully kick-off on 1st of January, 2019, NAICOM is now set to issue fresh licences to would-be big players in the nation’s insurance sector of the economy.

Findings show that interested applicants for the Tier 1 license must have  capitalised to the tune N15 billion to operate a composite insurance firm, with N9 billion capital base needed to float Non-Life company under this Tier, even as a sum of N6 billion capitalisation is needed to get a new Life insurance licence when the regulator lift embargo on issuance of new licence next year.

Confirming this development, the Director, Supervision, NAICOM, Mr, Barineka Thompson, said the commission had refused to grant new licences before now, to allow investors buy into some of the existing underwriters and make the insurance industry stronger.

According to him, “In the last 9 to 10 years, we have not issued any licences but we will open it up for any investor willing to play in Tier 1, as soon as the Risk Based categorisation commence next year.”

The Deputy Commissioner for Insurance, Mr. Sunday Thomas, had earlier said its 3 -tier based recapitalisation of  the insurance industry is to ensure that risks and retained locally.

He noted that most insurance businesses are taken abroad because most of the local underwriters have no capacity to absorb huge risks, especially, in aviation, marine and oil and gas sectors of the economy.

The new development, he said, will strength the insurance sector and enhance its contribution to the nation’s Gross Domestic Product(GDP).

LEADERSHIP had earlier reported that the Federal Government, through NAICOM, has introduced a three -tier based recapitalisation for the insurance industry.

This is coming 10 years after the earlier recapitalisation, which took place in 2007 in insurance industry in the country.

However, investigation shows that the major difference between the earlier recapitalisation and the current one, is that, in the current recapitalisation, there is no define uniform capital base as players operate in either of the three Tiers, according to their respective risks capacities.

To this end, composite insurance companies who are now interested to play in the Tier 1 category are expected to increase their capitalisation from N5 billion to N15 billion, while those interested in the same tier but operating Life business are mandated to upgrade their capital base from N2 billion to N6 billion, even as Non-Life Insurers planning to play in this Tier are expected to improve their capitalisation from N3 billion to N9 billion.

While Composite Insurers willing to operate in Tier 2 are expected to increase their capitalisation to N7.5 billion, Non-Life Operators are mandated to increase their capital base to  N4.5 billion, while Life Operators under Tier 2 category are expected to increase capitalisation to N3 billion.

However, for insurers willing to play in the lowest Tier, which is Tier 3, they are expected to maintain the current capital base of the Insurance industry.

In this instance, Non-Life Insurance Firms in Tier 3 to maintain N3 billion; Life Insurance Operators to maintain N2 billion and Composite Insurers are to maintain N5 billion capitalisation.

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