Recapitalization: Elumelu Proposes N30bn Capital Base for General Insurance, N20bn For Life Insurance Firms
Chairman, Heirs Holdings, Mr Tony Elumelu has proposed N30 billion as capital base for general insurance firms and N20 billion for Life Insurance firms operating in the country.
Elumelu stated this Monday at the ongoing National Insurance Conference 2023, organized by National Insurance Commission (NAICOM), holding at the Abuja Continental Hotel, Abuja.
The theme of this year’s Conference is “Redefining Safety: Insurance Solutions For Public Buildings and building under construction”.
Elumelu who is also the founder of the Tony Elumelu Foundation noted that the increase in recapitalization had become necessary as the current capital base of N8 billion for life and N10billion for general insurance was grossly inadequate.
“We should increase the capital base of Insurance Companies to N20Billion for Life and N30Billion for Non-life respectively.
He also advocated for the review of the contrast in Insurance authorisations/licences between life and non-life, stressing that consolidated operators should have N50billion. “Let us use regulation to shape behaviour and enforce compliance.”
For Brokers, the business magnate recommend N1billion recapitalization for while noting that with “the devaluation of the currency, you are talking about USD 8 million, USD10 million capital requirements for an insurance company in Africa’s largest economy.
“How can an industry intended to ‘insure’ and mitigate the risks associated with economic growth of a country have such low capital requirements.
“Let me be clear, recapitalisation is not about increasing the barriers to entry into the industry. Gatekeeping is not the objective here.
“But we must ensure that the sector has the financial muscle and backbone to handle more complex insurance transactions whilst extending reach. That is the only way the industry can scale and expand operations out of Nigeria and into Africa!.”
He also recommended that the industry should contribute 5% of total revenue to drive industry awareness for 5 years, noting that the leadership of Nigeria insurers Associations (NIA ) should be able to administer this initiative that would develop the insurance sector to be at par with it’s banking counterpart.
