Commissioner for Insurance, Kari
By CLEMENT NWOJI, Abuja
The National Insurance Commission (NAICOM) on Monday, set June 30, 2020 as new recapitalization deadline for all exiting insurance companies in Nigeria as part of the Commission’s renewed efforts at strengthening the financial muscle of Nigeria’s insurance sector and enhance its competitiveness.
Effective from the aforementioned date, the minimum paid-up share capital for each existing insurance company operating under the following classification increased as follows: Life Insurance companies N2 billion to N8 billion; general business insurance companies N3 billion to N10 billion; composite business insurance companies N5 billion to N18 billion and reinsurance companies N10 billion to N20 billion.
However, the Commission stated that the effective date for new applicants take effect from the commencement date of the circular which was May 20, 2019 while it excluded Takaful operators and Micro-insurance companies from the new recapitalization requirements.
NAICOM disclosed this in its circular referenced NAICOM/DPR/ CIR/25/2019 and dated May 20, 2019, addressed to all insurance and reinsurance companies.
The circular signed by the Commission’s Director, Policy and Regulation Directorate, Pius Agboola, was entitled “Minimum Paid-Up Share Capital Policy for Insurance and Reinsurance Companies In Nigeria.”
According to the circular, “In 2005/2007, insurance industry witnessed its last recapitalisation and despite the astronomical increase in value of insured assets, consequent exposure to higher level of insured liabilities and operating cost of insurers, the same capital continued to rule in the insurance industry.
“The provision in respect of requirement of statutory deposit as stipulated in Part III, Section 10 of the Insurance Act 2003 shall apply for effective date of commencement of this circular. All insurance and reinsurance companies are required to ensure strict compliance with this circular. The commencement date of this circular shall be May 20, 2019.”
It would be recalled that NAICOM had in July 2018 announced that the Tier Based Minimum Solvency Capital (TBMSC) to take off on January 1, 2019. But the TBMSC which was intended to restrict each insurance company operations to areas of its financial capacity was resisted by operators and this culminated to its cancellation in October, 2018 by the Commission.