Why we want strong firms – NAICOM

Why we want strong firms – NAICOM

Chuks Udo Okonta

The National Insurance Commission (NAICOM) is not interested in multitude, but firms that can respond to claims payment promptly, come out with new products that will change the environment and speak to the needs of the people, the Commissioner for Insurance Fola Daniel, said has.

He told Inspen that the desire of the commission is to groom firms that can compete favourably in the risk market globally. He noted that the commission would be comfortable with few viable underwriting firms with policies that will be environmental friendly.

He noted that the commission will remain resolute in enacting policies that would strengthen the industry, adding that the reforms put in place are yielding results going by the numbers of firms that have embraced the need to merge and become stronger.  

He said: “As a regulator, I am not interested in multitude. I do not want 200 insurance companies. What we want are companies that must be big, strong and comparable with what we have in other environment where there is insurance culture. We desire firms that can respond to claims payment promptly, come out with new products that will change the environment, come out with policies that will be environmental friendly and speak to the needs of the people. Our primary concern, is to have organisations that can meet their obligations as at when due.”

He said the industry is been groomed for risk-based recapitalisation that would enable operators raise capital in line with the business they under-write.   

“NAICOM is not looking at the direction of fresh recapitalisation. We are rather looking at what we call risk-based capital. By risk-based capital, companies would recapitalise in accordance with the risk they cover.

“So, if you are insurance company that does aviation and oil and gas underwriting, then you must have the wherewithal to absolve those risks. If you are an insurer that does motor insurance alone you do not need the same capital. That is the concept of risk-base recapitalisation. 

“That is what we have in other clan like Britain, United State and Canada. So, we need to migrate, because if we go to N20billion, and some insurance companies have capital in excess of N20billion, yet their ability to take large risk is very limited. So, why N20billion if you cannot underwrite businesses in aviation, oil and gas?” he said.

He said the industry has been moving very slowly and that NAICOM is poised to speedy the pace to which the operators should operate. He noted that many opportunities have been created for operators to develop their business.

“We have opened a lot of windows, it is just for them to walk in and tap the opportunities. We are not going to sell insurance products as regulators. What we are going to do is really to create opportunities which we have created. We have created many opportunities through the MDRI; the Federal Government also has created opportunities through the instrumentality of the Nigerian Content Bill. And the bill is a multimillion Dollar, Pounce, Euro businesses. When you translate that to Naira, you would see that the trillion premium target is achievable,” he added.