The National Insurance Commission (NAICOM) has that it is not going to withdraw the license of any insurance company in the three-tiers recapitalisation recently unveiled by the federal government.

With the new development, composite insurance companies who are now interested to play in the Tier 1 category are now 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. Thee non-life insurers planning to play in this Tier are expected to improve capitalisation from N3 billion to N9 billion.

While composite insurers willing to operate in Tier 2 are expected to increase their capitalization 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.

Tier 3 which is the lowest will have insurers willing to operate in this category maintain the current capital base of the Insurance industry. Therefore, Non-Life insurance firms in Tier 3 are to maintain N3 billion while Life Insurance operators will maintain N2 billion and Composite insurers N5 billion capitalization.

Kari, who was represented by the Director, Supervision, NAICOM, Mr, Barineka Thompson, said: “Interest rate has gone from single to double-digit, interest rate has increased over time and with many macroeconomic and institutional factors on the upward trends, while the industry still maintains the same capitalisation in the last 10 years. So, it is desirable for operators to now choose which tier they want to operate in. Some companies are finding it difficult to fulfill their obligations to their policyholders and shareholders because they are carrying risks above their limits.”

He said that this initiative will enhance the soundness and profitability of insurers through optimal capitalization, adding that, the introduction of proportionate capital that supports the nature, scale and complexity of the business conducted by insurers.

“In this instance, there is no cancellation of license, but operators will be subjected to solvency control levels and no mandatory injection of fresh capital by insurers,” he pointed out.

Kari said the difference between the three tiers, is in the nature of businesses they would be allowed to underwrite, announcing that the guideline on this would be issued on of August 3rd, 2018 while, the insurance industry, will, on January 1, 2019, commence the implementation of the three tiers recapitalisation.

He announced that NAICOM has slated August 6th to 10th, 2018, for awareness session with board members and key management staff of insurance companies and plan to release the transition guideline by August 3, 2018, while issuance of notification letter on assessed capital level will be from August 13th to 17th, 2018 and submission of board’s decision by operators to NAICOM will not be later than September 14, 2018.

Deputy Commissioner for Insurance, Mr. Sunday Thomas, who spoke earlier said the recapitalization scheme is aimed at developing and applying appropriate tools that consider the nature, scale and complexity of insurers, in order to limit significant systemic risk that will end in the development of strong underwriters in the Country.