Insurance consumers, especially oil majors, are seeking the transfer of their risks to insurance firms with N9 billion capital base.
This is the requirement in the cancelled Tier Based Minimum Solvency Capital (TBMSC).
But this is contrary to the reversed N3 billion capital base stipulated by the National Insurance Commission (PenCom).
Chartered Insurance Institute of Nigeria (CIIN) President, Mr Eddie Efekoha, who spoke at the workshop for insurance and pension reporters in Lagos at the weekend, said despite the cancellation of the TBMSC, most companies would still lose businesses they used to underwrite as policyholders were more aware of the need for an insurer to have adequate capital base to underwrite different kinds of risks.
Efekoha, who is also the Managing Director, Consolidated Hallmark Insurance Plc, said there is a particular transaction in Exxon Mobil for several years that never respected the N3 billion capitalisation, adding that operators whose capital were within this minimum were excluded from the business.
He said he was told of a broker, who said his client had informed him not to place risks with any underwriting firm with less than N9 billion as proposed in the cancelled TBMSC policy.
Efekoha lamented that with such developments, it was immaterial whether the industry regulator withdraws the TBMSC policy, adding that the policy has opened the eyes of insurance consumers.
He said: “What I heard from our office recently was that there is a broker that said my client has already seen that N9 billion is what is required, so please go and shore up. It is immaterial whether the Commission has withdrawn from the TBMSC or not. Of course, we are all here in this market; there is a particular transaction in Exxon Mobil for several years that never respected the N3 billion capitalisation and to that extent, some of us whose capital were not up to that minimum were excluded.
“Of course, it is equally a public knowledge that even Dangote for several years did not select underwriters based on the authorised capitalisation by NAICOM. So for clients to begin agitate, it means that the commission and all of us have whet the appetite of the consumer. So things have to change. I want to thank the commission for seeking the wisdom to suspend or cancel TBMSC.”
He said the commission never said the TBMSC was a recapitalisation, stressing that whatever meaning NAICOM gave, it was interpreted differently by operators and that the initiative was a wake-up call for operators to do certain things.
Efekoha said he is a major beneficiary of the TBMSC, adding that this is because sometimes in a board room, managers do have challenges in getting some policies through.
“Thanks to the commission because sometimes we ignore certain things that we should do and focus on less important things. The issue of TBMSC has brought about a reawakening in some of us who were already sleeping at that time-that we must do something in order to help our situation.
“Some of us needed external force to convince those we work with that there is need to push capital because we are fond of looking at our holding control. So, I think that to some of us, it was a motivation. I was part of those who were sleeping, and the commission has reawakened,” he said.
