Insurance operators are clamouring for the extension of the recapitalization deadline to September 30, 2021 from December 31, 2020
They also want waived, the first phase of its segmented recapitalization for the insurance and reinsurance companies scheduled to end December 31, 2020, as directed by the regulator, the National Insurance Commission (NAICOM).
The reasons given by the operators for the extension of the deadline are proximately related to the huge impacts of the COVID-19 pandemic and #EndSARS protests on their insurance businesses.
Thus, they require enough time to fully settle back to their businesses to be able to pursue more aggressive recapitalization agenda to meet the commission’s set objectives by 31 December, 2020.
The insurance companies are as well pleading with NAICOM to jettison the phase by phase segmentation of the exercise – with the first phase billed to elapse on December 31, 2020.
This plea was made during a meeting of the Chief Executives of all the insurance companies with the Commissioner for insurance at the industry’s professional forum in Abeokuta, Ogun State recently.
The operators are more concerned and agitated, as it relates to meeting certain thresholds by 31 December 2020, and failing to meet them would make the commission restrict the scope of business insurance and reinsurance companies they can transact.
In consideration of the economic realities, a number of the operators are even appealing to the commission to waive/step down the December 2020 deadline, to have ample time to rejig and revamp their businesses.
What you should know
- Life and general insurance companies were asked to shore up their existing minimum paid-up capital from N2bn and N3bn to N4bn and N5bn respectively by the end of December 2020, and meet the final minimum paid-up capital requirements of N8bn and N10bn respectively by the end of September 2021.
- Composite companies and reinsurance firms were asked to shore up from existing minimum paid-up capital of N5bn and N10bn to N9bn and N12bn by end of December 2020 and to N18bn and N20bn respectively by the end of September 2021.
- NAICOM extended the deadline for insurance and reinsurance companies to meet its new capital requirements to September 30, 2021 from December 31, 2020.
- NAICOM also mandated that 50 per cent of the minimum paid-up capital for insurance and 60 per cent for reinsurance must be met by 31 December 2020.
- NAICOM stated that insurance companies that failed to satisfy the required minimum paid-up capital by December 31, 2020 may be restricted on the scope of business they would transact.
- Nairametrics had reported that some insurance companies have been struggling to meet these requirements. There were also wide-spread speculations over possible mergers/acquisitions in the insurance sector.