The National Insurance Commission (NAICOM) has complied with a court order to suspend the ongoing insurance industry’s recapitalisation exercise, according to a source within the agency.
“You are aware that the issue is in court and there is an interim order of the court. NAICOM, being a responsible and law-abiding organisation, will respect the order of the court,” said a senior official who spoke on the condition of anonymity.
There had been calls for the insurance regulator to suspend the recapitalisation programme considering the impact of latest economic challenges such as the COVID-19 pandemic and #EndSARS protest.
Insiders said that NAICOM had responded to the letter written by the Nigeria Insurers’ Association (NIA) which outlined certain grey areas surrounding the ongoing exercise.
It was reported that NIA in a letter entitled Segmentation of Minimum Paid Up Share Capital of Insurance Companies in Nigeria: Appeal for Waiver of December 2020 Milestone, signed by the Director-General, Mrs Yetunde Ilori, implored NAICOM to respond to its request for waiver of the December 2020 deadline for the first phase of the recapitalisation exercise.
“This is underscored by a fast-approaching deadline and everybody is being kept in a suspense, which is not helping the market at the moment,” it said.
NIA asked NAICOM to kindly respond to its letter and provide a position on other matters to properly guide the operators and all other stakeholders, thereby putting an end to unintended speculations and uncertainties surrounding the ongoing recapitalisation exercise.
The NIA is not the only body seeking the suspension of the ongoing exercise with the House of Representatives recently passing a resolution demanding that NAICOM suspend its planned December 31, 2020, mandatory deadline for the first phase of 50 per cent – 60 per cent of the minimum paid-up share capital for insurance and reinsurance companies.
According to the House of Representatives, “the suspension is expected to last for six months from January – June 2021 and is necessary to give the insurance operators soft landing, as well as cushion the effects of Covid-19 and other unforeseen circumstances they might have suffered.”
The recapitalisation programme demands that life insurance firms meet a minimum paid-up capital of N8 billion, up from N2 billion; general insurance companies are expected to increase their paid-up capital to N10 billion from the earlier N3 billion.
Composite insurance (those that operate both general and life insurance) have been asked to recapitalise to the tune of N18 billion as against the previous amount of N5 billion, while reinsurance businesses are now required to have a minimum capital of N20 billion from N10 billion.