Akin Ogunbiyi, group chairman, Mutual Benefits Assurance Plc has again queried the ongoing recapitalisation in the industry, stating that it is not the only way to develop the market.
Ogunbiyi said is a misnomer that the National Insurance Commission (NAICOM) believes that the only way to develop the insurance sector is through capital increase.
Ogunbiyi whose company is expected to increase its capital to N18 billion said while he is confident that his company will pull through, lamented that the Commission as a Federal Government agency has given no support to the industry despite the enabling environment that the government has created to help businesses thrive.
He said it is hard to operate insurance business with N18 billion when banks that would not labour hard like them operate with only N25 billion.
He said: “I must still say that it is a misnomer that NAICOM thinks that the only way to develop the sector is just by increasing capital year in, year out.”
“Currently we are not able to return profit on the amount of capital we are working with. Insurance is totally undeveloped; I don’t know where the market is. The capital market is almost gone on his knees. Insurance is the least priority of cooperate world in Nigeria. Less than 1 per cent of Nigeria populations carry one form of insurance or the other.”
“Nigeria banks operate with N25 billion. Even if government passes N10 trillion budget, all the money goes through the bank. I cannot see any economic sense in asking us to recapitalize to the tune of N18 billion. Why would I put N18 billion in an insurance industry that is crawling and undeveloped when I can put N18 billion without lifting a pin and get 14 per cent return from government bond. I don’t know why the regulator will only be thinking that it is only capital that is needed to develop the industry. They have not followed up or given any support to the industry with the entire enabling environment that the government has created to support us.”
“For instance, the government took pension from us and gave it to another medium. Today, we are talking of over N6 trillion pension funds. If NAICOM follow through on compulsory insurance of vehicles, fire insurance, construction insurance, marine insurance among others, the sector would have been better.”
“We expect them to work with the National assembly and various agencies of government to make these insurances compulsory and ensure that the business is available for us just like the banks are doing. Whether the banks or pension operator lift a pin or not, they will make money. This is what the commission should be thinking and working on. “
The recapitalization a total disruption to the operation of insurance in Nigeria, I know Mutual Benefits will pull through but unfortunately it is a negative signal, he noted.
Modestus Anaesoronye
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