Insurance Recapitalisation Will Boost Capacity – Stakeholders

Stakeholders in Nigeria’s insurance industry have said the recently concluded recapitalisation exercise will strengthen the sector by increasing underwriting capacity, boosting public confidence and enabling insurers to retain more businesses within the country.

They also said the exercise would create greater opportunities for investment in technology, product innovation and stronger partnerships between insurance companies and brokers, thereby helping to deepen insurance penetration.

Speaking at a meeting with insurance brokers, the executive director of Consolidated Hallmark Insurance Limited, Mary Adeyanju, said the company was in Abuja to strengthen its relationship with industry partners and explore greater collaboration.

Adeyanju said the relationship between insurers and brokers was critical to translating the benefits of recapitalisation into tangible growth in the industry.

She said the company came from Lagos to support the brokers’ meeting and reassure them of its readiness to build a long-term partnership.

On the impact of the recapitalisation exercise, Adeyanju said 41 insurance and reinsurance companies had successfully recapitalised, while eight other companies were undergoing verification.

She expressed optimism that the number could increase after the verification process, which she said was expected to be completed soon.

According to her, the increased capital base would strengthen confidence in the insurance industry by giving companies greater capacity to underwrite risks and pay claims.

Adeyanju added that the exercise would reduce the amount of insurance business taken outside Nigeria, as local operators would now have greater capacity to retain risks within the domestic market.

She said increased local retention would contribute to economic growth and improve the contribution of the insurance sector to Nigeria’s Gross Domestic Product (GDP).

The executive director described the sector’s relatively low contribution to GDP as a concern, particularly given Nigeria’s large population and the number of Nigerians who remain uninsured.

She said the additional capital would enable insurers to invest more in technology and develop innovative channels for reaching underserved Nigerians.

According to her, insurers could leverage partnerships, embedded insurance and other technology-driven platforms to take insurance products closer to consumers.

Adeyanju also identified product innovation as another major benefit of recapitalisation, saying companies would now have greater financial capacity to develop products tailored to consumers’ actual needs.

She said insurers needed to move beyond simply selling existing products and develop solutions that addressed the specific risks and challenges faced by customers.

Adeyanju further said the exercise was expected to boost investor confidence and gradually improve public perception of the insurance industry.
Also, the managing director of CHI Life Assurance Limited, Dr Tope Ilesanmi, said the company’s participation in the brokers’ meeting was aimed at strengthening collaboration with a key segment of the insurance industry.

Ilesanmi described brokers as a major force in the sector because of their close relationship with consumers and their understanding of customers’ needs and challenges.

He said stronger collaboration between insurers and brokers would enable both sides to identify gaps in the market and develop solutions that would ultimately improve customer satisfaction.

On legal challenges by some companies affected by the recapitalisation exercise, Ilesanmi said such disputes did not undermine the overall quality of the exercise.

He said the process involved consultations with operators and stakeholders, adding that the regulator sought feedback before implementing the requirements.

According to him, while one or two companies might have areas of dissatisfaction requiring resolution, such issues should not be interpreted as a failure of the overall recapitalisation programme.

He maintained that the exercise was properly designed and implemented, while outstanding disputes could be resolved through the appropriate channels.

On what insurance brokers should expect from recapitalisation, Ilesanmi said the increased shareholder funds of insurance companies would translate into greater risk-retention and underwriting capacity.

He explained that higher capitalisation would enable insurers to absorb larger risks and provide greater capacity for customers.

He also linked the new capital base to increased investment in technology, noting that inadequate financing had often limited innovation within the sector.

Ilesanmi called for deeper collaboration between insurers and brokers, particularly because brokers are closer to consumers and understand their pain points.

He said such collaboration would be critical to increasing insurance penetration by ensuring that products are designed around consumers’ actual needs.

According to him, consumers are unlikely to continue purchasing insurance products that do not provide meaningful value, stressing that insurance products must deliver the protection and comfort customers expect.