Elumelu advocates tightened noose, N50bn cap for insurance firms
Barbara Bako, Abuja
The Chairman, United Bank for Africa and Heirs Holdings, Tony Elumelu, said the current economic realities of rising inflation and and dwindling vue of Naira at the foreign exchange market call for recapitalisation of insurance companies in Nigeria.
Elumelu, who is also the Chairman of Heirs Insurance, made the call on Monday at the ongoing 2023 National Insurance Conference today in Abuja.
Speaking on the theme of the Conference: ‘Redefining Safety: Insurance Solutions for Public Buildings and Buildings Under Construction’, Elumelu, said that the capital base of insurance companies should be increased to N20 billion for Life and N30 billion for Non-life respectively.
He also proposed that the consolidated operators should have N50 billion capital.
The Heirs Holdings Chairman, also said insurance brokers capital base should be increased to N1billion.
He said there should be a review of the dichotomy in Insurance authorisations/licences between life and non-life, adding that regulation should be used to shape behaviour and enforce compliance.
Elumelu called on the National Insurance Commission (NAICOM) to focus on substance and things that will shape the sector and stop approving adverts, stressing that NAICOM should use that time for more important aspects of regulation and save taxpayers money for more catalytic actions.
He maintained that today, capital requirements are set at N8 billion for Life insurance and N10 billion for general insurance, adding that with the devaluation of the currency, the capital amount to about USD8 million, USD10 million capital requirements for an insurance company in Africa’s largest economy.
“How can an industry intended to ‘insure’ and mitigate the risks associated with economic growth of a country have such low capital
requirements.
“Let me be clear, recapitalisation is not about increasing the barriers
to entry into theindustry.Gatekeepingis not the objective here.
“But we must ensure that the sector has the financial muscle and backbone to handle more complex insurance transactions whilst extending reach.
“That is the only way the industry can scale and expand operations out of Nigeria and into Africa!,” he said.
He also proposed that all insurers should mandatorily contribute 0.5 per cent of total revenue to drive industry awareness for five years, adding that the Nigerian Insurers Association (NIA) should administer this professionally.
