Insurance industry recapitalisation will reduce

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, on Monday, said the recapitalisation of the insurance industry will reduce the risk of insolvency and protect policyholders in the sector.

The minister said this in Abuja at the opening session of a meeting of the Association of African Insurance Supervisory Authorities.

The National Insurance Commission had in a circular announced the new capital requirements for operators in the insurance industry.

In the circular to its regulated entities, life insurance companies’ capital was raised from N2bn to N8bn, general companies got a raise from N3bn to N10bn, while composite insurance companies’ capital was raised from N5bn to N18bn

Addressing delegates at the event, Zainab said the recapitalisation of the insurance industry is one out of the many initiatives the Federal Government is implementing to reposition the sector to boost economic growth.

In view of the objectives of government for the sector, she said the recapitalisation was necessary to increase the safety and soundness of the system as well as strengthen the financial position of the companies.

She also said the government is implementing the no premium no cover policy to facilitate the reduction in outstanding premium, improve liquidity position of insurance companies and ensure prompt payment of claims.

Ahmed said a financial inclusion initiative is also being implemented through microinsurance and Takaful insurance products.

This, according to her, is intended to bring insurance services to the underserved segment of the society.

She said, "It is informative to state that a veritable approach towards a healthy competitive private sector economy is the enhancement of the structure of the government-led supervisory framework.

"In other words, it is believed that where supervisors are ahead of the institutions they regulate in relation to operations and conducts, then achieving growth, volumes, and impacts on the economy becomes easier.

"For us in Nigeria, one of the priority sectors in the diversification strategies of the economy from an oil-dependent economy is the agricultural sector which has also recorded sustainable growth and development.

"It is therefore commendable to note that this annual meeting also flanks a workshop on index-based agricultural insurance which I hope will be beneficial to the agricultural value-chain of our various countries."

She said many economies have been restructured to strategically recognize the potential dividends of regional cooperation and integration, adding that Nigeria will always support any framework that fosters mutually beneficial ties with other countries.

The Acting Commissioner for Insurance, Mr. Sunday Thomas said now is the time for the association to adopt a new insurance principle on cross-border cooperation and crisis management for the continent.

"We need to ensure due consideration and adoption of the Insurance Core Principle 26 on Cross-border Cooperation and Coordination on Crisis Management especially with consideration to the underlying benefits and the attendant implications of the African Continental Free Trade Area agreement on our business models," he said.

He said based on its aim of bridging the capacity gap among members, NAICOM will henceforth complement the annual meeting with a workshop session on index-based agricultural insurance.