Elumelu calls for increased insurance recapitalization requirements
By Patience Ikpeme
Tony Elumelu, Chairman of Heirs Holdings and United Bank for Africa (UBA), has called for a significant increase in the recapitalization requirements for insurance firms in Nigeria.
He suggests raising the capital requirement to N20 billion for life insurance and N30 billion for non-life insurance.
Elumelu made this proposal at the ongoing National Insurance Conference 2023 in Abuja, which is themed “Redefining Safety: Insurance Solutions for Public Buildings and Buildings Under Construction” and is hosted by the National Insurance Commission (NAICOM).
Elumelu emphasized the need for insurance companies to commit five percent of their annual revenue for five years to boost awareness about insurance. He pointed out that a mere two percent of Nigerians currently have insurance coverage, largely due to a lack of awareness.
The proposed recapitalization thresholds put forward by Elumelu are considerably higher than the existing requirements, which stand at N8 billion for life insurance and N10 billion for general insurance.
He argued that the current capital levels are insufficient for underwriting certain high-risk categories, especially with currency devaluation making it even more challenging for insurance companies.
Elumelu clarified that recapitalization is not about making it harder for new entrants into the industry but rather about ensuring that the insurance sector has the financial capacity to handle complex transactions and expand its operations, not only in Nigeria but across Africa.
He also addressed the broader issue of enforcing insurance coverage for public buildings and construction sites in Nigeria, stressing that it reflects wider problems within the insurance industry.
Elumelu urged NAICOM to open up the sector to young and innovative minds and create an enabling environment for transformation.
He expressed concern about the low insurance penetration in Nigeria, which stands at less than two percent, despite a population of over 200 million people. He highlighted the importance of insurance in protecting individuals and their communities from financial uncertainties.
Minister of Finance and Coordinating Minister for the Economy Mr Wale Edun who was represented by the Permanent Secretary Finance Mr. Okokon Ekanem Udo said government will create the environment for insurance to thrive.
He said alot needs to be done to enable growth of the insurance sector, adding that Tinubu’s administration is determined to ensure that risks are minimised through insurance.
According to Edun, “the era of government providing support for insurance victim is no longer sustainable which is why the government is partnering private sector to ensure that the challenges of insurance claims are addressed,”
In his address, the Commissioner for Insurance and CEO of NAICOM, Mr. Sunday Thomas, said that the commission has been actively working with state governments and security agencies to enforce compulsory insurance.
In terms of industry performance, Thomas noted that the premium income of the insurance sector has grown significantly, from N282 billion in 2014 to N726.2 billion in 2022. The total assets of the sector have also shown substantial growth.
Furthermore, Thomas mentioned that NAICOM has played a role in supporting government initiatives, including contributing to the fight against COVID-19 by mobilizing the insurance industry to provide financial support and free life insurance cover for frontline workers.
The conference on insuring public buildings and construction sites is part of NAICOM’s efforts to raise awareness about compulsory insurances and enhance collaboration with government and non-government agencies to ensure effective enforcement of insurance requirements across the country.
