Following the recent introduction of tier-based recapitalisation for the insurance industry of which the deadline to comply is January 1, 2018, insurance agents are pleading that the National Insurance Commission (NAICOM) should extend the deadline.
Speaking on behalf of insurance agents at a press briefing organised by the Association of Registered Insurance Agents of Nigeria (ARIAN) in Lagos at the weekend, its president, Mr. Ademola Ifagbayi, said, such extension would give more time to underwriters to explore the best option to recapitalise.
Stating that the association fully supports NAICOM’s move, he believed insurance companies need more time to understand the new recapitalisation model and make a decision on where to play in.
According to him, “ARIAN is in total support of NAICOM on the new tier based insurance recapitalisation exercise. However, we will like to appeal to NAICOM to consider Nigerian Insurers Association (NIA) position in order to make the process easy and convenient for all stakeholders.”
Ifagbayi, who is also a general manager in Mutual Benefits Assurance Plc, said, insurance agents weres partner in progress and would always support any development aimed at deepening insurance penetration, acceptance, profitability and increases insurance contribution to the gross domestic product (GDP) of the country.
He believes the recapitalisation was a welcome development that would lead to existence of financially strong insurers able to deploy the strength of insurance agents to penetrate the nooks and crannies of the country.
The federal government, through NAICOM, has introduced a 3 -tier based recapitalisation for the insurance industry, giving January 1, 2019, as the commencement date.
To this end, all insurance companies must have recapitalised and communicate to NAICOM which tier each of them was expected to play in.
This is coming 10 years after the earlier recapitalisation, which took place in 2007 in insurance industry in the country.
However, investigation showed that the major difference between the earlier recapitalisation and the current one, is that, in the current recapitalisation, there is no defined 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 is to maintain N3 billion; Life Insurance Operators to maintain N2 billion and Composite Insurers are to maintain N5 billion capitalisation.
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