Tag Archives: NAICOM

CEOs anxious over insurance industry recapitalisation


THERE is anxiety in the insurance industry over the recapitalisation directive issued by the National Insurance Commission (NAICOM) to Chief Executive Officers (CEOs).

Some CEOs have kept mum over the new development that will categorise them into Tier 1, Tier 2 and Tier 3; others are worried over the ‘’wrong’’ timing of the regulator’s directive.

NAICOM last week introduced a Tier-Based Minimum Solvency Capital (TBMSC) structure, a complementary measure to its ongoing implementation of the Risk-Based Supervision (RBS) model that will lead to recapitalisation by the risk-bearing firms.

It said with effect from January 1, next year, the companies will be classified into three different tiers based on their individual strength and capacity to underwrite big or small risk. Under the new arrangement, Tier 1 companies will be considered as the biggest player, Tier 2, the middle player and Tier 3, the smallest player.

One of the CEOs, who spoke on condition of anonymity, said it is worrisome why the regulator should choose this time of the year to roll out such a directive.

Though he said had nothing against the Commission’s plan to make companies recapitalise, he faulted the timing, which he said, wasn’t appropriate considering the imminence of a general election in the country.

He said aside that it would be difficult to achieve the set target in five months, it would be also be extremely difficult to raise money during an election year.

He said: “We are not saying that recapitalisation is not good, but the timing is inappropriate. Election is coming next year and it will be difficult to raise money. The Commission expects us to merge or acquire, but it will be difficult to achieve either of these in five months.

“The operators and the regulator just started the rebranding process of the industry. We need to win the people’s trust and the regulator is now talking of Tier 1, Tier 2 and Tier 3.”

Another CEO kept mum, but continuously said: “It is well” when contacted while another said he and his management team are preparing to meet with the Board of Directors to brief them on the implications of the new development.

Another CEO urged the regulator to be cautious of the likely negative impact the move would have on the image of operators in the industry.

According to him, classifying a company small and big creates a negative image for the companies as not many people would like to go and patronise a company already classified as small by no less and organisation than the regulator.

The RBS model will see the insurance industry recapitalise following the recapitalisation exercise carried out in 2007.

National Insurance Commission to launch NIIDP for financial participation

As part of efforts to deepen financial inclusion through insurance, the National Insurance Commission (NAICOM) is to launch Nigerian Insurance Industry Development Plan (NIIDP).

The Commissioner for Insurance (CFI) in Nigeria, Alhaji Mohammed Kari, disclosed the plan on Monday at the opening ceremony of the 2018 National Insurance Conference in Abuja.

He said that the NIIDP would have financial inclusion as a major component which the country’s insurance industry would use to reduce the number of citizens that were financially excluded by developing friendly premium policies.

His words: “It was Christine Lagarde, the Managing Director of the International Monetary Fund (IMF) at the 2014 International Forum for Financial Inclusion held in Mexico, who said, ‘the poor do not have access to basic financial services such as payments, savings and insurance.

“Accessing financial services will help families increase investments and consumption, help in insuring against unfavorable events, thus reducing the poverty level during any occurrence.”

Kari said the loophole discovered by Lagarde had made Nigeria to launch the National Financial Inclusion Strategy (NFIS) to reduce the percentage of adults that were excluded from financial services from 46.3 percent to 20 percent by 2020.

The Commissioner for Insurance (CFI) in Nigeria said that work had been concluded on the plan with inputs from KPMG, a consulting firm, which would independently monitor its implementation to ensure each insurance arm is assigned responsibilities.

“It may interest you to know that the plan has been presented to the Insurers Committee, a body comprising management of NAICOM, Chief Executive Officers (CEO’s) of insurance companies.”

He said that heads of insurance trade associations would be included to ensure that every player in the industry would be on the same page with NAICOM, the regulator:

“I use this medium to commend insurance committee and KPMG for the good job on the NIIDP.

“As we may be aware, financial inclusion is premised on the principles of equity like social cohesion and bridging the gap in income equality and inclusive economic growth and development.”

Kari said that the NIIDP would have a global objective which would have different dimensions with countries and institutions willing to develop models to suit their peculiar environment.

“However, the insurance sector in Nigeria would effectively and efficiently navigate it to increase the number of policy holders while reducing the figure of the financially excluded, which are part of what the NIIDP contain.”  he said.

The conference is organized annually by the Insurance Industry Consultative Council (IIC). The theme of the 2018 meeting is “Insurance Industry and Financial Inclusion”.

Over 500 Insurance practitioners from the Nigerian Council of Registered Insurance Brokers (NCRIB), Chartered Insurance Institute of Nigeria (CIIN), Nigeria Insurance Association (NIA) and Institute of Loss Adjusters of Nigeria (ILAN) and the regulator are participating.

FG to introduce new classification for insurance firms

                                           Executive Director of NAICOM Alhaji Muhammad Kari

The Federal Government, through the National Insurance Commission, plans to introduce a new classification policy in the industry, the Commissioner for Insurance and Chief Executive Officer of NAICOM, Mr Muhammad Kari, has said.

Kari stated this at an executive breakfast meeting organised by the Society for Corporate Governance Nigeria, in Lagos on Wednesday.

According to him, under the planned policy, insurance firms will be classified on a risk-based system, where they will be restricted to their areas of competence and abilities.

In a lecture entitled, ‘Corporate governance and the Nigerian insurance industry’, Kari said the policy would restrict insurance companies to operate only within their areas of core competences and capital assets.

The commissioner stated, “We are used to classifying companies with their capital but we are working on the process of introducing risk-based classification, which will try to see what assets or capital can cover.