Recapitalisation key to bigger risks underwriting, says regulator
The National Insurance Commission (NIACOM) has said the ongoing recapitalisation exercise will enhance the capacity of local insurance companies to retain risk businesses in the country.
The Acting Commissioner for Insurance, Sunday Thomas, who spoke at the industry gathering at Ijebu Ode, said that the commission is committed to ensuring that industry is highly liquid, with solid assets, thereby, increasing its contribution of the sector to the nation’s Gross Domestic Product (GDP).
While believing that insurance sector would be better off post-recapitalisation, he added that the exercise will reduce foreign influence on Nigeria’s risk market.“The whole idea of the recapitalisation exercise is to have an industry that is strong; diligent in prosecution of its assignments; highly liquid in terms of claims settlement, and solid in terms of assets and visible in terms of retaining business within our environment,” he said.
NAICOM, he promised, will continue to do everything to improve the contribution of insurance to growth and development of the nation’s economy.The work ahead maybe more active than could ever be imagined because of the many grounds to be covered, he stressed.
Calling for the support and cooperation of insurance operators, development partners, shareholders and other government regulators to grow insurance sector, he added that the exercise is all about restructuring the balance sheet of the insurance companies so that they can fulfil their obligations to clients.
Stating that the regulatory body will welcome investors either into existing companies or totally new companies, he said, the supreme aim is to have an insurance industry that is able to support the government in its initiatives, creates employment by reason of expansion, and at the end, add value to our economy.
The Guardian reliably gathered that due to low risk retention capacity of local insurers, multinational companies whose risks could not be insured in the local market, had taken the insurance risks worth N16.91 trillion abroad.
However, the nation’s underwriting companies were able to retain N37.69 trillion Sum Insured in the local market.The N16.91 trillion risks ceded abroad means that the capacity of Nigerian insurance industry is restricted due to the fact that some insurers have low capitalisation, hence, could not absorb more risks.
Besides, The Guardian findings revealed that the country has less expertise in some evolving risks, hence, could not underwrite them and had to cede them abroad. While experts called for capital injection from investors, either local or foreign ones to boost the risks retention capacity of local insurers, they also called for technical support of the industry so that operators are able to write some risks that the country is currently ceding abroad.
No comments yet