Reeling from the bruises of stoppages of series of capital raise in the insurance market by several Courts interventions spanning several years , the National Insurance Commission is putting a legal armour that put be a halt to future objections by any company or other interests in the industry.
The Commissioner for Insurance, Sunday Thomas disclosed this at a retreat with Insurance Journalists in Uyo, Akwa Ibom State. Under his watch also, the Court had halted recapitalisation exercise that was streaming to a logical conclusion, alas that anticipated recapitalisation that had gone through several stages remains hanging until an Act empowers the Commission to raise capital, in the expected Act a defined criteria would hang Court intervention.
With a history of Court stopped recapitalisation judgements, Thomas and NAICOM henchmen see the Insurance Bill currently going through another round of legislative law making as a certified chance and ray of hope that would put previous stoppages permanently out of Court order.
He means it. The chequered trail NAICOM had experienced notwithstanding, he makes it clear, “We haven’t given up” on recapitalisation process. The botched recapitalisation exercise he noted, was based on risk based capital.
In anticipation that the efforts and high grade inputs the Commission had made into the Insurance bill that is in the works at the National Assembly would be retained, the CFI said two things would happen once the bill is accented to.
“There is a different section on risk based capital. It will take care of the issue of recapitalisation. We don’t need to fight anybody. No.” Even before the big bang that will announce the insurance Act, Thomas said insurance companies are racing to increase capital, and he reiterated that these companies on their own without prompting are ‘willingly writing” to us that are increasing their capital with evidence of doing so.
“But the moment the bill becomes an Act and we are implementing the minimum required capital, that will be the end of issues relating to recapitalisation. What we will be left with will be individual companies capital need for business transaction which will be dependant on the risk that company is carrying,” he stated. He explained that companies that are exposed to heavy aviation, marine and oil and gas risks would not be expected to have same level of capital with a company that is transacting motor insurance risks. In the same vein he said a company that is exposed to 80% transaction on individual life cannot be expected to have same capital as those who are heavy on annuity at 60 – 70%.
“These are risk related capital and its not just the Commission dictating capital to individual companies. That is what we call own risk assessment.” In the coming insurance law, the Commission helmsman said companies will assess themselves, “all we (NAICOM) need to do is to provide the standard that is needed to work it out.”
The Commission believes that the bill that is brewing is a big push towards a new regime in defining capital levels for defined level of business transaction by individual companies and it would ultimately, change the system of capital requirement associated for a company’s underwriting, That is why the CFI exuding confidence calls the bill when it earns the President accent the “game changer” and the Commission would follow after the signing with a regulator’s charge to “hit the road running.”