to recapitalise the industry for enhanced service delivery.
Although, timing has been the major complaint in the two botched exercises, and maybe the regulator should have given more time for operators to upgrade capital judging by the harsh economic reality, but market observers still believe the industry need recapitalisation, irrespective of the form it’s going to take.
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 motion marked FHC/L/CS/1797/2020 and filed on December 15, 2020, was moved on behalf of the group by their lawyer, I.C. Ifedora.
The suspension then, it was learnt, may not be unconnected to the court case instituted by insurance shareholders under the auspices of the Insurance Shareholders Association of Nigeria , stopping NAICOM from commencing the implementation of the Tier-Based Minimum Solvency Capital model in the insurance sector of the nation’s economy.
Under the previous exercise, Tier one has the highest capital base while Tier three has the minimum capital base. The managing director, Lancelot Ventures Limited, Mr. Adebayo Adeleke, who is also a prominent member of Independent Shareholders Association of Nigeria , charged insurance operators not to relent as suspension is not cancellation, stressing that the court case could turn in favour of NAICOM.
They described this model as the right capital model for the insurance industry in a bid to emulate other developed economies, noting that, adoption of this model signals that the Nigerian Insurance market now operates with the International best practice. This, they believe, will equally reposition the industry for accelerated growth and development.
When the bill is eventually signed into law in line with this proposal, he said, it will lay to rest, the contentious issue of the definition of capital which has been a major point of the association’s engagements with the regulatory body during the ongoing recapitalisation exercise.
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