Insurance regulator, the National Insurance Commission (NAICOM) may have concluded plans to issue a fresh composite insurance license, a new development that would bring the number of underwriting companies operating in Nigeria to 60, BusinessDay investigations reveal.
The composite insurance license is an approval that enables an underwriting firm to do both life and non-life or general insurance business.
This will be the second license to be issued by the commission since the insurance industry recapitalisation exercise in 2007, which brought the number of underwriting companies from 117 to 59 following mergers and acquisitions among companies.
FBN Life Insurance was the only license issued, which the commission then, was given based on the expectation that the company would ride on the back of First Bank Holdings, it’s owners to deepen insurance penetration using their numerous branches across the country. FBN Holdings was said to have over 700 branches, spread across Nigeria, which could serve as sales outlets for FBN Life, which has recently concluded acquisition of Oasis Insurance, a non-life company.
Fola Daniel, commissioner for Insurance, said though NAICOM stopped issuing fresh license for a long time, the reason according to him was that it needed some level of consolidation in the industry.
“There was no law that said we could not issue fresh licenses but we felt we should hold on for a while, to enable some consolidation including mergers, injection of fresh funds and investment from within and outside Nigeria into existing companies.”
He said: “In democracy, no government official or commissioner can say there would not be issuance of license, you cannot do that. If a company meets all the requirements, we cannot but issue license. We also look at the moral factor, such as, would the company create additional value and improve the industry?
“We also have the responsibility to help the government in job creation and reduce unemployment. So, if a new company is coming on board and it would generate employment for Nigerians, add value to insurance, why would we not give it a licence?
“It would be recalled that the industry has set out plans to create 300,000 jobs in the next two years and the industry, inclusive of agents and brokers, currently employs about 50,000 persons but the insurance industry has the capacity to employ a lot more, the government believes, and we will support them.”
A CEO of one of the leading insurance companies who commented on the development, said the space is huge and anybody can come in.
“I do not think that the numbers of insurance companies is too much, but I would want a situation where two or three companies that share the same vision would come together and operate as a bigger entity. There is benefit in synergy and that is what I think we should embrace in the market”, the CEO said.
Oye Hassan-Odukale, managing director/CEO, Leadway Assurance Company Limited, speaking on the entrants of foreign insurers into the local market and whether there is any threat to local firms said, “I think we will all co-exist together. It will not be easy for them as well, except if we are lazy. But at the end of the day, the consumer will get a better product because there will be competition.
“What we require is to build a good company, have a structure, not just by fiat because you must do your product very well and respond to people very well.
He said Leadway used to be a local company in the north but came here to prove itself, exist here and be accepted in the market here. So be it local, be it international, be it anything, you must serve the people properly so that they will believe in you.”
Modestus Anaesoronye
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