31st August, 2018
The National Insurance Commission (NAICOM) on Friday confirmed backdating the insurance companies Tier-based recapitalization commencement date to Oct. 1, as against January 1, 2019, it earlier announced.
Mr Rasaaq Salami, NAICOM’s spokesman, made the confirmation in Lagos.
The confirmation was sequel to doubts expressed by some players in the industry on the adjournment of the recapitalization date.
“The backdate means that operators only have one month and two days to recapitalize,’’ 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 recapitalization implementation was released in July, the Federal Government through NAICOM issued a new circular dated Aug. 14.
The circular according to him, the circular mandated all insurance companies to recapitalize 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 circular as saying.
Underwriters interested to play in the tier 1 category are expected to increase their capitalization 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 capitalization from N3 billion to N9 billion.
While Composite Insurers willing to operate in tier 2 are expected to increase their capitalization to N7.5 billion.
Life Operators under tier 2 category are expected to increase capitalization 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 is to maintain N3 billion; Life Insurance Operators to maintain N2 billion and Composite Insurers are to maintain N5 billion capitalization.