By Zainab Iwayemi
Insurance and reinsurance companies operating in Nigeria have, for the second time this year, requested the industry regulator, National Insurance Commission (NAICOM), to extend the December 31, 2020 deadline given to them to meet new minimum capital requirements.
They have advanced as major reason for the request, the huge impact on the economy and businesses of the Covid-19 pandemic as well as the recent social unrest that followed the peaceful #ENDSARS protests across the country.
The request was made at a meeting of insurance companies’ chief executive officers with the commissioner for insurance at the industry’s professional forum in Abeokuta, Ogun State last week.
Earlier in the year, NAICOM had, in addition to extending the deadline for insurance and reinsurance firms to meet new capital requirements, created a two-phased process to ease pressure on the companies. The re-scheduled dates were 31st December 2020 and 30th September 2021, against the initial 31st Dec 2019.
The phased process was made to enable insurance companies to meet 50 per cent of the new minimum capital requirements, while reinsurance providers were required to meet up to 60 per cent of the new minimum capital requirement by the close of the first phase. They were then required to have reached 100 per cent compliance by the deadline of the second phase.
An insurance executive who did not want his name in print said insurance operators at the meeting tabled fresh requests for the recapitalisation exercise to be concluded in December 2021, and the interim milestone assessment scheduled for December 2020 be stepped down.
“The waiver will give the insurance and reinsurance companies more time to settle back to business and pursue their full recapitalisationprogramme in order to meet the commission’s set objectives by December 31, 2021. We are convinced that it will take businesses, especially insurance companies, some time to ascertain the full extent of loss and recover from the shock of the devastating developments,” he said.
He further disclosed that operators are very much interested in meeting up with the deadline as failing to meet up could cost restriction on the scope of business they could execute, citing that some insurance companies are currently trying to pick up their pieces as a result of the damages done by the pandemic and the #ENDSARS protests across the country.
The new guideline from the regulator (NAICOM) requires companies providing life insurance coverage to have a minimum capital of N4 billion, up from the previous N2 billion, by 31 December 2020 and paid-up capital of N8 billion by 30 September 2021. Also, those offering general insurance business are required to meet a minimum capital of N5 billion and a minimum paid-up capital of N10 billion by 31 December 2020 and 30 September 2021 respectively, up from the existing minimum capital of N3 billion.
Similarly, with minimum capital currently standing at N5 billion, companies offering composite business are expected to have a minimum of N9 billion, while reinsurers are to shore up their paid-up capital to N12 billion from N10 billion by 31 December 2020.
Conversely, by the close of September 2021, composite insurance firms and reinsurance operators are expected to shore up their capital base to N18 billion and N20 billion respectively, from the current N9 billion and N12 billion, respectively.