Insurance operators capitalising on Covid-19 pandemic as well as the #EndSARS protest and their impacts on the ongoing recapitalisation exercise in the industry, are calling for deadline extension to 31st December 2021, as against 30th September 2021 earlier slated by the regulator.
Besides that, they are also asking the National Insurance Commission (NAICOM) to drop the phase by phase segmentation of the exercise, to which the first phase is expected to lapse by 31st December 2020.
As directed by NAICOM, any company that fails to comply with the minimum paid-up capital of 50 percent of its capital requirement based on their class of business (Life, General, or Composite), may be restricted from certain classes of business effective end of December 2020.
But operators worried by these are approaching the Commission to review the exercise, having written to the Commission as a group and physical appeal at the recent NAICOM/CEO’s meeting held in Abeokuta, Ogun State at the sideline of the Chartered Insurance Institute of Nigeria 2020 Professionals forum.
A Chief Executive of one of the insurance companies who wish that his name should not be mentioned said, “This was part of what we requested from the Commission during the high profile meeting in Abeokuta”.
“Our request is for the recapitalisation exercise to be concluded in December 2021, while the interim milestone assessment scheduled for December 2020 be stepped down.”
The Executive said the operators had earlier appealed to the commission to waive the December 2020 milestone, though it’s Association.
“The waiver will give us more time to settle back to business and pursue the full recapitalisation programme in order to meet objectives of the exercise”.
The CEO said the operators were more concerned about the aspect relating to attainment of certain thresholds by December 31, 2020, failing which the commission may restrict the scope of business insurance and reinsurance companies will transact.
The National Insurance Commission (NAICOM) had on 3rd June 2020 extended insurance companies recapitalization deadline to 30th September, 2021, with first phase to end December 31, 2020.
NAICOM in a revised circular sent to insurance and reinsurance companies titled: ‘Segmentation of minimum paid-up share capital requirement for Insurance and Reinsurance Companies said “The incidence of Covid-19 Pandemic has made it difficult to proceed with the 31st December 2020 recapitalisation deadline earlier slated.”
The statement signed by Pius Agbola, director Policy and Regulation in NAICOM said a review of the recapitalisation deadline therefore became imperative in order to mitigate likely negative consequences of the pandemic on the exercise.
According to the Commission, the exercise will run in two phases as follows: 50 percent of the minimum paid-up capital for insurance and 60 percent for reinsurance shall be met by 31 December 2020, while they will be required to fully comply with approved minimum paid up capital not later than 30th September 2021.”
The segmentation shows life companies operating currently with N2 will increase to N4 billion by 31st December 2020, as first phase and to N8 billion by 30th September 2021; General business companies operating currently with N3 will increase to N5 billion by 31st December 2020, as first phase and to N10 billion by 30th September 2021; Composite business companies operating currently with N5 will increase to N9 billion by 31st December 2020, as first phase and to N18 billion by 30th September 2021; while Reinsurance companies operating currently with N10 billion will increase to N12 billion by 31st December 2020, as first phase and to N20 billion by 30th September 2021.
