The National Insurance Commission (NAICOM) on Friday confirmed backdating the insurance companies tier-based recapitalisation commencement date to Oct. 1, as against January 1, 2019 it earlier announced. Mr Rasaaq Salami, NAICOM’s spokesman, made the confirmation in an interview with the News Agency of Nigeria (NAN) in Lagos.
NAN reports that the confirmation was sequel to doubts expressed by some players in the industry on the adjournment of the recapitalisation date. “The backdate means till 1st of October to recapitalise,’’ Salami said.
The spokesman said it was imperative for the commission to shift the date in order to re-position the industry for unbeatable performance in the financial sector. “The commission would not withdraw any license but only ensure that an underwriter has adequate capital to absorb risks,’’ he said.
Salami said after the first guideline on recapitalisation implementation was released in July, the Federal Government through NAICOM issued a new circular dated Aug. 14. According to him, the circular mandated all insurance companies to recapitalise and communicate to NAICOM the tier they intended to play in before Oct. 1.
Salami said that only companies that meet the respective tier requirements shall lead on new businesses in those categories with effect from Oct. 1. “Companies shall be assessed, in the first instance, on their approved financial statement for 2017, and audited half year account for 2018.
“However, where a company is yet to obtain approval for its 2017 financial statement, its last approved audited accounts will be used for the assessment,” Salami quoted the statement from the circular as saying.
NAN reports that underwriters interested to play in the tier 1 category are expected to increase their capitalisation from N5 billion to N15 billion. The underwriters interested in the same tier but currently operating Life business are mandated to upgrade their capital base from N2 billion to N6 billion.
The Non-Life Insurers that wanted to play in the tier are expected to improve their capitalisation from N3 billion to N9 billion. While Composite Insurers willing to operate in tier 2 are expected to increase their capitalisation to N7.5 billion. Life Operators under tier 2 category are expected to increase capitalisation to N3 billion.
However, for insurers willing to play in the lowest tier, which is tier 3, they are expected to maintain the current capital base of the insurance industry.Non-Life Insurance Firms in tier 3 are to maintain N3 billion; Life Insurance Operators to maintain N2 billion and Composite Insurers are to maintain N5 billion capitalisation.