NAICOM to insurers: provide financial status before recapitalisation

The National Insurance Commission (NAICOM) has asked the 59 insurance firms in the country to report the capital needs of their businesses in a financial condition report in preparation for recapitalisation.

The commission said it was necessary to determine regulatory capital that would be appropriate for the firms, which comprises Life, Non-Life and Composite, to hold sufficient capital to cover their risk and liabilities when they arise.

Commissioner for Insurance, Mohammed Kari, in an interaction with reporters in Lagos said the commission expects the report from the firms while it prepares a guideline that would be released in due course.

Kari said since the Minister of Finance, Mrs. Kemi Adeosun, made a statement at the last Insurance Industry Consultative Conference ( IICC), the Commission has been inundated with requests to clarify what she meant by her statement which read “would need to recapitalise.”

He said: “But I ask, what is there to clarify? However, there is nothing to panic about. It is the expectation of any business to have adequate capital to meet its liabilities.

“This is more so in insurance business that has a time frame for companies to settle their claims. We have quite a number of companies that have either eroded capital base or have miss-matched their assets or liabilities cover, mostly arising from wrong investment decisions. Our concern is for the firms to hold sufficient capital to cover their risks and liabilities when they arise at all times. This is very crucial in turbulent times like the ones we are currently going through.

“While we are going to develop a full risk based capital framework, we will be expecting companies to initiate the appropriate capital adequacy reviews and have their actuary report the capital needs of their business in a financial condition report.

“A guideline would be released in due course. It is important for all insurers and reinsurers to get used to voluntarily holding capital that would protect policy holders against adverse outcomes that could negatively affect their ability to meet their obligations. Those in the annuity business can easily relate to this statement because of their experience in 2015.”