The Chairman of Mutual Benefits Assurance Plc, Akin Ogunbiyi, has taken another swipe at the recapitalisation plan of the National Insurance Commission (NAICOM), stating that it’s a retrogressive move and the Federal Government must wake up from its slumber.
Ogunbiyi is a known critic of the recapitalisation plan. He doesn’t agree with the purpose of the NAICOM initiative, stating there’s no reason for the requirement of the new capital base. According to him, the current capital base of the insurance sector is the biggest in Africa despite not having the same level of penetration with some African countries.
The new capital structure for Life, Non-Life and Composite insurance companies, including reinsurance companies, were increased from N2 billion, N3 billion, N5 billion and N10 billion to N8 billion, N10 billion, N18 billion and N20 billion.
FG needs to wake up from slumber: Nairametrics had previous reported that Ogunbiyi was against the recapitalisation plan of NAICOM, and had spoken against it at every opportunity he had.
“The insurance industry currently employs about three million people. If you have one insurance company that is able to recapitalise, will that take the place of the 10 that will go out of operation? No.
[READ MORE: Again, NAICOM shifts insurance recapitalisation deadline]
“Many of the companies have not focused on fintech and retail business. All they focus on is corporate insurance and their balance sheet.
“This recapitalisation policy will kill the industry if the policymakers, the Federal Government, ministry of finance don’t quickly wake up and see that this is a retrogressive move.
“Capital base is not the only way to make insurance create value and be more relevant in the national economy.”
Recapitalisation is not the solution: According to him, the insurance companies have other problems that needed to be addressed. Ogunbiyi said if insurance companies were unable to use their capital for profitability, increasing the capital base would have no impact.
[READ MORE: Again, NAICOM shifts insurance recapitalisation deadline]
“Why will I bring N18bn to get an insurance licence and go through all these malpractices of operating in the industry when I know by putting N1bn in Federal Government bond, I am guaranteed 13%.
“We have quoted insurance companies that have not been able to pay dividend in the last 10 years.”
He added that, “There is problem of confidence for renewal of business for this January. The brokers that control 95% of the market are in dilemma today.
“They know the capacity of the companies. Only about five companies are in the threshold. Can they absolve the entire risk of the whole country?”