Eleven years after the last recapitalisation exercise in the nation’s insurance industry, operators are resisting the newly introduced Tier-Based Minimum Solvency Capital (TBMSC) as five countries are already scrambling to learn the model from the National Insurance Commission, NAICOM. Director, Inspectorate of Naicom, Mr Barineka Thompson, at the 2018 Seminar themed, Achieving A Seamless Implementation Of The TBMSC Policy in Nigeria, held in Abuja over the weekend, said that the resistance of insurance operators to change has negatively affected the sector marred its growth potential.
He said, “It is a convention in our industry to resist change and until we accept the reality, we are not going to catch up with the rest of the world.” He said that the TBMSC is an indigenous model, stating that the combination of the modules was put together by the Commission though Tier Base is not entirely new to some countries but the unique model. According to him, ” Each module is a familiar one to operators but the combination of the modules are something you cannot find even in the advanced countries. It is wholly crafted and introduced by the Commission”. Though Barineka did not mention the countries, but said, “As we are here now, 5 countries have already indicated interest to learn the TBMSC from Naicom.”
On the argument from operators that they were not well consulted on TBMSC, the Commission said that it had for over two years been prompting the sector’s operators up about the need to shore up their capital base before former Minister of Finance, Ms Kemi Adeosun at the opening ceremony of the National Insurance Conference organised by the sector’s Insurance Industry Consultative Council (IICC) held in Abuja two years ago told operators that there was no alternative to recapitalisation of the sector. Adeosun had said, “the first top three banks in the country have over N30 billion capital base each while the top three insurance companies’ capital base is between N20 and 25 million each.”
That was further confirmed by the former Director-General of Nigeria Insurance Association NIA, Mr Sunday Thomas who in an interview said that the umbrella body would meet with NAICOM on how best its members can be recapitalised. Thomas had said said, “Minister of Finance, Ms. Kemi Adeosun has told us about the need for the industry operators to recapitalise. NIA will meet with NAICOM on the best way to go about it. And we will take it up from there.” Up until now, NAICOM put a deadline for the implementation of this exercise for January 1, 2019, which was vehemently opposed by operators before the change of deadline to October 1, 2018.
The Commissioner for Insurance, Alhaji Mohammed Kari did not minced words when he told operators “We have quite a number of companies that have either eroded capital base or have miss-matched their assets or liabilities cover, mostly arising from wrong investment decisions. “Our concern is for the firms to hold sufficient capital to cover their risks and liabilities when they arise at all times. This is very crucial in turbulent times like the ones we are currently going through. “While we are going to develop a full risk based capital framework, we will be expecting companies to initiate the appropriate capital adequacy reviews and have their actuary report the capital needs of their business in a financial condition report.
