President Muhammadu Buhari has thrown his weight behind the plan to recapitalise Nigeria’s insurance companies.
Addressing stakeholders at the opening session of the national insurance conference held in Abuja, the President stated that the recapitalisation will enable the insurance industry to be more responsive to the objectives of his administration to the country’s economy.
Represented at the event by the Permanent Secretary in the Ministry of Finance, Mahmoud Isa-Dutse, Buhari said the Federal Government expects an increase in the insurance sector’s financial capability to enable local risk retention and prompt payment of claims.
“The insurance sector plays a vital role in the financial sector because it reduces the poverty line, assist people to manage their risks, protect them from adverse effects due to unforeseen circumstances and increases access to other financial services.”
It should be recalled that the National Insurance Commission (NAICOM) had mandated insurance firms to recapitalise or lose their licenses. The insurance sector regulator had increased the minimum paid-up share capital of insurance and reinsurance firms, a move which sent shock waves across the country’s insurance sector.
Breakdown of the new capital regime below:
- life insurance underwriting firms, which currently have a minimum paid up share capital of N2 billion, will compulsorily shore up their capital to N8 billion, representing a 200 percent increase.
- By the new paid-up share capital regime, Insurance firms underwriting general business have been mandated to shore up their capital from N3 billion to N10 billion.
- Composite insurance firms, that is, firms underwriting both life and general business will raise their capital from the current N5 billion level to N18 billion.
- Reinsurance firms will move up from the current minimum capital of N10 billion to N20 billion.
NAICOM fixed June 30th, 2020 as the deadline for the compliance with the new capital base.