The Chairman, United Bank for Africa and Heirs Holdings, Tony Elumelu, has proposed a N20 billion capital base for life, N30 billion general and N50 composite insurance operations.
He said this on Monday at the 2023 National Insurance Conference in Abuja.
Speaking on the theme of the Conference: ‘Redefining Safety: Insurance Solutions for Public Buildings and Buildings under Construction’, Elumelu, noted that the insurance industry should increase the capital base of insurance companies to N20 billion for Life and N30 billion for Non-life respectively.
He submitted that composite operators should have N50 billion capital.
The Heirs Holdings Chairman also said insurance brokers’ capital base should be increased to N1 billion.
He said there should be a review of the dichotomy in Insurance authorisations/licences between life and non-life, adding that regulation should be used to shape behaviour and enforce compliance.
Elumelu called on the National Insurance Commission to focus on substance and things that will shape the sector and stop approving adverts, stressing that NAICOM should use that time for more important aspects of regulation and save taxpayers money for more catalytic actions.
He maintained that today, capital requirements are set at N8 billion for life insurance and N10 billion for general insurance, adding that with the devaluation of the currency, the capital amounts to about $8 million, $10 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 said.
He also proposed that all insurers should mandatorily contribute 0.5 per cent of total revenue to drive industry awareness for five years, adding that the Nigerian Insurers Association should administer this professionally.
Elumelu said NAICOM should allow brilliant minds to come into the insurance sector and limit years of experience only to technical areas.
“Let us open the insurance sector in Nigeria to our young and innovative minds. With the right enabling environment, we will see the transformation of the Nigerian insurance sector. Let me emphasize that our regulators and the government have a critical role to play in making insurance a common right of every Nigerian citizen,” he said.
He added that, “It is embarrassing that Nigeria has less than 2% insurance penetration, in a nation of over 200 million people, struggling to survive, amidst the harshest economic realities.
“In a society where people are not insured, they are exposed to financial uncertainties that not only affect them, but their families and communities. It is a huge break on our common growth, Ladies and Gentlemen.
“Thus, we must re-assess and eliminate the stifling policies, roadblocks, and complacency in the insurance system, to encourage innovation and provide our people with simple and accessible insurance, not as an option, but as a fundamental right to secure their future, all within a regulatory framework that serves both clients and grows our industry,” he submitted.
