Nigeria likely to lag-behind other countries in TBMSC implementation

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MATTHEW OTOIJAGHA

Unless urgent steps are adopted to resolve the impasse clogging the implementation of the Tier-Based Minimum Solvency Capital (TBMSC), three Africa countries that had visited the National Insurance Commission (NAICOM) to understudy the model may start implementation of the initiative before Nigeria.

It was gathered that prior to the Court Order that had halted the implementation of the initiative; many countries across Africa had indicated interest to understudy the model of which three countries had visited the nation’s insurance regulator with the aim of replicating same model in their insurance industry.

Industry watchers are of the belief that the nation’s insurance industry which is trailing behind her counterparts across Africa will continue to stand behind once these countries commence implementation of the noble initiative developed in Nigeria.

According to them, noble ideas like No Premium No Cover, which commenced in Nigeria, and was adopted by many countries across Africa, had really helped to deepen insurance sectors in the countries, even as Nigerian insurance sector grabbles with enormous challenges.

They called on the government to intervene and ensure that the impasse is settled to enable the industry move forward.

Owing to the litigation, NAICOM had implored insurance companies to continue to operate on subsisting regulatory framework prior to the issuance of the circular on TBMSC.

NAICOM noted that in compliance with the extant rules and the injunction issued by the Federal High Court regarding the TBMSC framework which was to take effect from October 1, 2018, had to be put to a halt and that the status quo should be maintained, while insurers should continue to operate on subsisting regulatory framework prior to the circular.

It maintained that appropriate regulatory directive would be advised upon conclusion of the suit.

NAICOM had in July this year, released a guideline on TBMSC which classified the business of insurance.

According to NAICOM, companies were to be classified based on their 2017 financial accounts. In this vein, Tier 3 companies are those that falls within existing paid up capitals of N2 billion for life business; N3 billion for non-life business and N5 billion for composite business.

Companies in this category will be limited to underwrite only risks in life business in the following areas – Individual Life, Health Insurance, Miscellaneous Insurances; while for non-life they will be limited to underwrite risks in these areas – Fire, Motor, General Accident, Engineering (only classes covered by compulsory insurance), Agriculture and Miscellaneous Insurances. Tier 2 companies are those whose paid up capital has increased by 50 percent above the existing minimum capital.

For life business, their paid up capital will be N3 billion and they are to underwrite all Tier 3 risks and Group Life Assurance (GLA); while for non-life, their paid –up capital base will be N4.5 billion and they will underwrite all Tier 3 risks, Engineering (All inclusive), Marine, Bonds Credit Guarantee and Surety ship Insurances.

Tier 1 companies are those whose paid up capital has increased by 200 percent, above the existing minimum requirement. Life companies in this category will have capital of N6 billion, and will underwrite all Tier 2 risks and Annuity. While for non-life business, the paid up capital will be N9 billion, and will underwrite all Tier 2 risks and Oil & Gas (oil related projects, exploration & production), and Aviation Insurances.

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