The National Insurance Commission (NAICOM) has been urged to increase the capital base in the insurance industry to help it meet current market realities and compete effectively in the dynamic market.
The proposal was made on Monday by Mr. Tony O. Elumelu, Chairman of Heirs Holdings Group, Heirs Insurance Group, and UBA Group, as well as the Founder of The Tony Elumelu Foundation, during the ongoing 2023 National Insurance Conference in Abuja.
Mr. Elumelu suggested a minimum capital base of N20 billion for life insurance, N30 billion for general insurance, and N50 billion for composite insurance operations.
He also recommended that the capital base of insurance brokers be increased to N1 billion. Mr Elumelu emphasised the need to review the division between life and non-life insurance authorizations and licences, stating that regulation should be used to shape behaviour and enforce compliance.
He advised the National Insurance Commission (NAICOM) to shift its focus from approving advertisements to concentrating on more significant aspects of regulation. He argued that the Commission should allocate its time and resources to more catalytic actions.
Mr. Elumelu highlighted the current capital requirements for life insurance at N8 billion and N10 billion for general insurance.
He pointed out that with the devaluation of the naira, these capital requirements amount to about $8 million and $10 million for life and general insurance, respectively, in Nigeria, the largest economy in Africa.
Mr Elumelu stated, “How can an industry intended to ‘insure’ and mitigate the risks associated with the economic growth of a country have such low capital requirements?
“Let me be clear: recapitalisation is not about increasing the barriers to entry into the industry. Gatekeeping is not the objective here.
However, we must ensure that the sector has the financial muscle and backbone to handle more complex insurance transactions while extending its reach.
That is the only way the industry can scale and expand operations out of Nigeria and into Africa.”
Additionally, he proposed that all insurers should be required to contribute 0.5 per cent of their total revenues to drive industry awareness for five years. He called on the Nigerian Insurers Association (NIA) to professionally administer the policy.
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