Elumelu highlights steady growth path for Nigeria’s insurance sector, proposes new capital base
The Chairman of Heirs Holding, Mr Tony Elumelu on Monday called on the National Insurance Commission to raise the capital base for non-life insurance companies to N30bn while that of life insurance firms should be increased to N20bn.
He said this at the national insurance conference held in Abuja with the theme, “Redefining safety: Insurance solutions for public buildings and buildings under construction.”
Currently, the paid up capital for Life insurers is N8bn; general underwriters N10bn; while composite and reinsurance companies have new minimum paid-up share capital requirements of N18bn and N20bn
In his paper, Elumelu said while the proposal is unpopular, it will have huge impact on the insurance industry in the long run.
He also called for a review of the dichotomy in insurance authorisations/licences between life and non-life insurance firms, noting that consolidated operators should have N50bn.
He said, “I want to see our sector grow in the same way. I embrace competition, but I know if we, the government, regulators and industry players work together, we can create an enormous market that serves the greater good.
“Consequently, I propose as follows: We should increase the capital base of Insurance Companies to
N20bn for Life and N30bn for Non-life respectively.
“Review the dichotomy in Insurance authorisations/licences between life and non-life. Consolidated operators should have N50bn. Let us use regulation to shape behaviour and enforce compliance.
“NAICOM should allow brilliant minds to come into the insurance sector and limit years of experience only to technical areas. Let us open the insurance sector in Nigeria to our young and innovative minds.”
“NAICOM should focus on substance and things that will shape the sector and stop approving adverts. Use that time for more important aspects of regulation and save taxpayers money for more catalytic actions.
“All insurers should mandatorily contribute 0.5 per cent of total revenue to drive industry awareness for 5 years. NIA should administer this professionally. Insurance Brokers capital base should be increased to N1bn.”
He said with the right enabling environment, we will see the transformation of the Nigerian insurance sector.”
“Let me emphasize that our regulators and the government have a critical role to play in making insurance a common right of every Nigerian citizen”
“How can an industry intended to ‘insure’ and mitigate the risks associated with economic growth of a country with such low capital requirements.
“Let me be clear, recapitalisation is not about increasing the barriers to entry into the industry. Gatekeeping is not the objective here.
“But we must ensure that the sector has the financial muscle and backbone to handle more complex insurance transactions whilst extending reach. That is the only way the industry can scale and expand operations out of Nigeria and into Africa!.”
He also called on the commission to focus on substance and things that will shape the sector and stop approving adverts.
He said the commission should use the time for approving adverts for more important aspects of regulation and save taxpayers money for more catalytic actions.
He also recommended that the industry should mandatorily contribute 0.5 percent of total revenue to drive industry awareness for 5 years, noting that the leadership of Nigeria insurers Associations (NIA ) should administer this initiative professionally.
“We must re-assess and eliminate the stifling policies, roadblocks, and complacency in the insurance system, to encourage innovation and provide our people with simple and accessible insurance, not as an option, but as a fundamental right to secure their future. All within a regulatory framework that serves both clients and grows our industry.”
Meanwhile, the Commissioner for Insurance, Sunday Thomas said the Commission, under his leadership, has remained resilient and focused on implementing initiatives that will foster development of the Nigerian insurance industry and align its fortune with that of the nation as the Africa largest economy.
He said the commission has ensured improved safety and soundness of the Nigerian insurance sector to continue to de-risk economic activities of Nigerians through the enhancement of prudential regulatory tools and good corporate governance practices.
He also said the Commission has open up the insurance supply-side through licensing of twelve additional new entrants and expansion of insurance distribution channels.
The licensing of these companies, he added, has enhanced availability of insurance products as well as increase local insurance capacity in Nigeria.
According to him, the last time an insurance company was licensed by the Commission before those recently licenced, was 10 years ago while that of any Reinsurance company was 32 years ago.
In terms of its performance, the NAICOM Boss said the industry premium income between 2014 and 2022 grew at an average of 13.6 per cent; from a premium income of N282bn to N726.2bn.
He said the total assets of the sector also grew at an average of 12 per cent for the same period; from an asset base of N827.5bn in 2014 to N2.33trn in 2022.
He said over the next decade (2024-2033), the Insurance industry will seek to continue its transformation journey along the following Seven strategic thrusts with the objective of achieving the corresponding goals.
The strategic thrust are to transform the regulatory environment to sustain the industry growth, transition to risk-based capital model, promote insurance awareness and adoption, broaden insurance product offerings and improve effectiveness of distribution channels among others.
