The Managing Director/Chief Executive Officer, Anchor Actuarial Services Limited, Mr. Pius Apere has urged the National Insurance Commission (NAICOM) to convert any insurance company that fails to meet up with the terms of recapitalisation to a micro insurer.
The Details: Apere made this call at the annual conference of the National Association of Insurance and Pension Correspondents (NAIPCO). He said converting failed insurance firms into micro insurers would help widen the scope of the insurance sector instead of a massive recapitalisation that might cause several struggling firms to die off.
Apere noted that it was imperative to revisit the Tier Minimum Capital Base Approach for micro-insurance as considerations should be given to insurance companies who cannot meet the new requirements for recapitalisation.
Recall that NAICOM set recapitalisation at N2 billion capital base for life insurance companies, N3 billion for general insurance, N5 billion for composite insurance firms and N10 billion for reinsurance firms.
“Now that the Tier Based Minimum Solvency Capital, TBMSC, policy is cancelled, it will be appropriate to revisit the tiered minimum capital base approach for micro-insurance by encouraging existing conventional insurance companies that will not be able to recapitalize under the new recapitalization regime to register as national micro-insurers in order to serve the low-income segments, thereby supporting the evolution of more inclusive insurance systems. This would no doubt increase the number of micro-insurance providers needed significantly which in turn would accelerate the insurance penetration at the grass-roots in the country,” he stated.
What you should know: Microinsurance guideline stipulates that a unit micro insurer must have N15 million as the capital base for life business, N25 million for general business and N40 million for composite business. A state micro insurer must have N40 million for life business, N60 million for general business and N100 million for composite business while a national micro insurer must have N200 million for life business, N400 million for general business and N600 million for composite business.
A Nairametrics report hinted that the number of insurance firms that operate in Nigeria will reduce from the present 59 to around 25 according to a Coronation Research. The 25 firms left standing would be leveraged by mergers and acquisitions due to the new capital requirements issued by the regulator.