Amaka Obiefuna

The National Insurance Commission (NAICOM) says it intends to implement the Tier-Based Minimum Solvency Capital (TBMSC) to make Nigerian insurance companies sustain their businesses and to checkmate the excess of insurance companies for the benefits of the policy holders, investors and the economy at large.

The Commissioner for Insurance, Mohammed Kari who stated this while speaking at the 2018 seminar for Insurance Correspondents/Business Editors and Bureau Chief in Abuja over the weekend with the theme: “Achieving a seamless implementation of the TBMSC policy in Nigeria”, said despite growing fears and concerns about the policy, the overall strategy and outcome will make insurance companies grow and survive any financial crises that may come.

He said “everybody cannot be everything. We want people to strategize and consolidate what we have gotten in code of conduct. This policy will make insurance companies to survive any financial crises that may come.”

Kari stressed that the intention of the regulator was not to kill any company but to stop them when they were getting involved in some businesses above their risk capacity. He noted that though NAICOM was yet to be served with any court injunction, the commission had to carry out its duty as a regulator whose responsibility is to nurture an industry to grow.

He however stressed that the exercise was not a capitalization project, and that the commission was not asking any company to get more money, but only to play where their capital allows them, adding that NAICOM was not seeking to withdraw license of any operator and would not compel any company to raise money but would be subjected to minimal control level.

The Director, Supervision of NAICOM, Barineka Thompson, explained in his presentation that the TBMSC Model was a regulatory model designed for the application of proportionate solvency capital that supports the nature, scale, complexity and risk profile of the business conducted by insurers.

He said the benefits of creating capacity for bridging insurance gap, optimizing local retention and minimizing capital flight, limiting significant systemic risks and building confidence in the insurance industry, supporting the stability of the financial system as well as increasing insurance contribution to the nation’s Gross Domestic Product, will be achieved without a mandatory injection of capital and cancellation of license, but that insurers would be subjected to solvency control level.

Thompson added that the policy would enable soundness and profitability of insurers through optimal utilization of capital; encourage insurers to focus on the area of their strengths, encourage innovation and deepen market penetration, build investors’ and public confidence in the industry.