ASSBIFI seeks extension of tier-based minimum capital for insurance firms  

TUC cautions against industrial crisis in NSITF

The Association of Senior Staff of Banks Insurance and Financial Institutions (ASSBIFI), has warned that the January 1st 2019, deadline for the implementation of recapitalisation of the 57 insurance firms in the country will lead to increment in joblessness and closure of more businesses in the country.

In a letter with reference number ANS/IIR/EO/YOS/970 dated 15th August 2018 and addressed to the Commissioner for Insurance of the NIC tagged, ‘Re: Recapitalisation of insurance companies in Nigeria – The Tier-based minimum solvency capital appeal for deadline extension’, the union noted with concerns that the inability of many insurance companies to honour contractual obligations and the need for restructuring of capital resources for improved liquidity and claims settlement have been on the negative impact on the industry. 

With this worry in mind, ASSBIFI expressed its full support for the current move to reposition the industry to enable it focus on areas of strength thereby deepening market penetration, increase public confidence and attract investors. 

The fresh move to recapitalise the insurance requires that the existing 57 insurance firms in the country will now be categorised as high, medium and low players identified as Tier 1, 2 and 3 companies respectively with effect from January 1, 2019.Despite the urgency needed to ensure the industry operates within the international best practice, the union observed that the January date is too short and may likely be injurious to the sector.  

Its words: “However, we have analysed the January 2019 deadline given and its capital impact on the industry, its operational impact in the form of higher regulatory compliance cost, its business strategic impact due to the change in the risk appetite and internal capital trigger points, change in level playing field, review of investment strategy, culture and process, and we are of the opinion that the period is too short and ill-timed as a deadline fro companies to meet the expected recapitalisation. A time period of less than one year may not be enough for all matching adjustment, illiquidity premium treatment and capital injection by investors who are mindful of year 2019 as an elective year. Otherwise, many of the organisation will embark on massive staff rationalisation that will further jeopardise the already saturated unemployment market in the country. The embarrassment this will attract in an election year may be unimaginable to the government and its viral effect on the industry.”

The letter, which was jointly signed by the ASSBIFI National President, Oyinkan Olasanoye and Acting Deputy Secretary General, Yekeen Shittu, appealed for a shift to December 2019 as take off date to allow for proper planning of all the relevant stakeholders to ensure continued growth of the sector and for the benefit of the economy.

In the meantime, the Trade Union Congress (TUC) has urged feuding parties in the repositioning of the Nigeria Social Insurance Trust Fund (NSITF) to thread softly and put the interests of the Fund first. 

In a communiqué issued at the end of its National Administrative Council (NAC) meeting held on Friday, August 3rd, 2018 at Sheraton hotel, Abuja, TUC called on relevant stakeholders to ensure stability of the Employees Compensation Scheme (ECS) for the benefit of injured workers and not create instability in its operations.The communiqué, which was signed by the President of TUC, Bobboi Kaigama and Secretary General, Musa Lawal read in part: “The congress observed with dismay the crisis at the Nigeria Social Insurance Trust Fund (NSITF) leading to two public senior officials exchanging words publicly.

The NAC further observed that this kind of situation is giving wrong signals to the contributors of the fund and other stakeholders. The congress therefore called on political leaders to put the national interests for setting up the Fund above other interests and urged them to be more cautious in their utterances and action lest we derail the Fund.”