The National Insurance Commission, NAICOM, said that it has heightened its regulatory oversight to ensure that insurance companies take up only businesses that they have the capacity to undertake.
Commissioner for Insurance, Alhaji Mohammed Kari, who disclosed this, noted that the move is part of efforts to protect shareholders’ investments in insurance companies. Kari said, “As insurance companies submit their reinsurance arrangement at the end of the year, we could tell some that ‘your capital does not justify doing this business, so you are restricted to this’’.
‘‘We have always been doing it. Our opinion is discretionary, we apply it as we see fit at the time. It is our duty to ensure that only capable companies operate incapable areas.” Kari who reiterated that NAICOM has the regulatory powers to do so, said, “It is within our regulatory powers to protect shareholders, as well as consumers, to ensure that companies only operate in areas where they have the wherewithal. This is to ensure that shareholders commitments in a company are protected.”
According to Kari, the current capital level of insurance companies was introduced thirteen years ago which is contrary to what is obtainable in other financial sectors. He said, “Insurance anywhere in the world is the mobilizer of funds and provider of security. You cannot provide security if you don’t have capital.
‘‘How can you approach a microfinance bank of N5 billion and tell them you want to give them protection? What is your capital? The claim you pay and the liability you hold is a function of your financial ability. “Insurance companies own virtually all the financial sector in the world. They fund infrastructure because they have long term funds to fund long term business.”