Stakeholders in the Insurance industry has lamented the cancellation

of the Tier Based Minimum Solvency Capital (TBMSC) framework by the

National Insurance Commission (NAICOM) late 2018, saying that this

would have checked capital flight in the industry as the insurance

companies would have been strengthened to handle some of the huge

insurance businesses being taken abroad.

Invariably, the capital base of the industry remains the same by this

cancellation which implies that, Non-Life Insurance Firms are to

continue to operate with a minimum of N3 billion capitalisation; Life

Insurance Operators to maintain N2 billion and Composite Insurers are

to maintain N5 billion minimum capital base, a base to which they will

conduct their respective businesses in 2019.

Analysts speaking at the National Association of Insurance and Pension

Correspondents (NAIPCO) workshop in Lagos recently, averred that if

the recapitalisation exercise was successful the capitalisation of

insurance industry would have increased by at least 300 per cent,

which would have allowed insurers in the country to retain some of the

huge insurance businesses being taken abroad.

The President, Chartered Insurance Institute of Nigeria (CIIN) who is

also the Managing Director/CEO, Consolidated Hallmark Insurance Plc,

Mr. Eddie Efekoha, therefore called on the insurance companies to

shore up their capital base in the new year, irrespective of the

cancellation of the recapitalisation exercise.

He pointed out that most insurance companies will still lose

businesses they used to underwrite as policyholders seemed poised to

transfer their risks to underwriting firms with strong capital base.

He stated that there is a particular transaction in Exxon Mobil for

several years that never respected the N3 billion capitalisation,

adding that operators whose capital were within this minimum were

excluded from the business.

Efekoha disclosed that recently, he was told of a broker, who said his

client had informed him not to place risks with any underwriting firm

with less than N9 billion as proposed in the cancelled TBMSC policy.

He posited that with such developments, it is now immaterial whether

the industry regulator withdraws the TBMSC policy, adding that the

policy has opened the eyes of insurance consumers.

He said: “What I heard from our office recently was that there is a

broker that said that my client has already seen that N9 billion is

what is required, so please go and shore up. It is immaterial whether

the commission has withdrawn from the TBMSC or not. Of course, we are

all here in this market, there is a particular transaction in Exxon

Mobil for several years that never respected the N3 billion

capitalisation and to that extent, some of us whose capital were not

up to that minimum were excluded.

“Rate-cutting is expected to continue in Insurance Industry in 2019 as

insurers scramble for businesses, especially, in the formal sector

base.”

According to experts development that is hurting insurance industry in

terms of premium income, is risk-cutting; a regrettable act they said

must be addressed to increase insurance contribution to the nation’s

Gross Domestic Product (GDP).

The Deputy Commissioner for Insurance, Mr. Sunday Thomas, said: “There

was a point in this market when 10 per cent for comprehensive

insurance was sacrosanct, but later, it came down to five per cent and

that became the standard. But you and I also know that there was a

point that some operators were charging as low as one per cent

“Also, there was a point that 3rd party was N5, 000. You and I know

that it came to a point where people were charging N1, 000 and the

market was producing N200 million premium income from this business.

If they decide to charge N5000, what is the market likely to produce?”

This challenge, he said, must be addressed by insurers to increase the

stake of the industry to pay genuine claims as and when due, noting

that, when a risk underpriced, it affects the ability to promptly pay

claims.

The Managing Director, NSIA Insurance Limited, Mrs. Ebelechukwu

Nwachukwu, said, insurance in 2018, has grown significantly  in terms

of the quality of products insurers rolled out, the quality of

channels of distribution, the quality of people they engaged and the

commitment of insurers to grow the people, thereby, increasing

insurance penetration in the country.

In her view: “If we can push all of these over and over in 2019,  I

have no doubt at all that penetration will increase and premium will

rise also. Today, the industry is paying better salary and so people

are better; operators study more than any other industry I have

engaged with, they are dedicated to writing examinations, attending

seminars, conferences and workshops, they want to be heard and an

insurance person wants to be heard intelligently.”

She urged Nigerians to insure their respective risks with insurance

companies, stressing that insurance is important to the average or

even the so called below average families.

However, allaying fears of the negative state of the industry, the

Chairman, Nigerian Insurers Association (NIA), Mr. Tope Smart, who is

also the Managing Director/CEO, NEM Insurance PLC, said, the nation’s

economy has been projected to expand by about 2.5 per cent in 2019,

promising that insurance industry will take advantage of this expected

growth.

“We have figures of the growth of about 20 per cent when you compare

the figure for 2017 and 2018 and I hope 2019 will better. By the time

we have the end of the year result; we will be having what I call a

very positive result. The industry will continue to pioritise claims

settlement and both regulator and operators are working together to

put insurance companies on their toes to pay genuine claims through

NIA and NAICOM complaint bureaus,” he explained.