The National Insurance Commission (NAICOM) said that the Commission has not asked any insurance company to raise capital. It Tier-Based Minimum Solvency Capital (TBMSC) is not a recapitalisation policy or project. We are also warning insurers not to de-market other operators over the tier-based policy.
Speaking at the 2018 annual seminar for Insurance and Pension Correspondents Association of Nigeria(NAIPCO)/Business Editors and Bureau Chief in Abuja over the weekend with the theme: “Achieving a seamless implementation of the TBMSC policy in Nigeria”, Commissioner for Insurance, Mohammed Kari stated that the exercise was not a capitalization project, and that the commission was not asking any company to get more money, but only to play where their capital allows them, adding that NAICOM was not seeking to withdraw license of any operator and would not compel any company to raise money but would be subjected to minimal control level.He however stressed that the despite growing fears and concerns about the policy, the overall strategy and outcome will make insurance companies grow and survive any financial crises that may come
Kari pointed out some of the important of the Tier-Based Minimum Solvency Capital (TBMSC) in the Nigerian insurance companies as its intends to sustain their businesses and to checkmate the excess of insurance companies for the benefits of the policy holders, investors and the economy at large.
NAICOM Boss said “everybody cannot be everything. We want people to strategize and consolidate what we have gotten in code of conduct. This policy will make insurance companies to survive any financial crises that may come.”
Kari stressed that the intention of the regulator was not to kill any company as it was alluded to by some operators; rather the policy is to stop them when they were getting involved in some businesses above their risk capacity. He noted that though NAICOM was yet to be served with any court injunction, the commission had to carry out its duty as a regulator whose responsibility is to nurture an industry to grow.
“It is the convention of the insurance industry to resist. That is what has kept the industry the way it is today. Unless we change, we cannot grow like other sectors of the economy. Today, the insurance industry is at a crossroad of failure and survival. Our objective is to help the industry to consolidate strategically and help our industry and economy not to suffer when the next recession comes. The good side is that the insurance sector is now the growth area in the economy.”
On the court process instituted against the Commission over the policy by a group of shareholders, the NAICOM chief said the regulator has not been served with any court order.
“We have not been served with any court order. We cannot comment on the litigation until we have such documents. We only read about in the papers.”
The Director, Supervision of NAICOM, Barineka Thompson, explained in his presentation that the TBMSC Model was a regulatory model designed for the application of proportionate solvency capital that supports the nature, scale, complexity and risk profile of the business conducted by insurers.
Thompson said the benefits of creating capacity for bridging insurance gap, optimizing local retention and minimizing capital flight, limiting significant systemic risks and building confidence in the insurance industry, supporting the stability of the financial system as well as increasing insurance contribution to the nation’s Gross Domestic Product, will be achieved without a mandatory injection of capital and cancellation of license, but that insurers would be subjected to solvency control level.
He added that the policy would enable soundness and profitability of insurers through optimal utilization of capital; encourage insurers to focus on the area of their strengths, encourage innovation and deepen market penetration, build investors’ and public confidence in the industry.
The Caption Photo: Commissioner for Insurance, Mohammed Kari