Matthew Otoijagha
The National Insurance Commission (NAICOM) has pledged to develop a framework that will ensure money raised from the ongoing recapitalization is judiciously utilized so that shareholders can have value for their money.
The Director, Policy and Regulation Directorate, NAICOM, Pius Agboola, who said this in Lagos, noted that the need for escrow accounts with Central Bank of Nigeria (CBN) while the funds are being raised cannot be over-emphasized, stressing that prospective investors’ money must be protected against any future contingencies.
The insurance industry regulators also maintained that funds raised from investors in the recapitalization would be refunded, if the companies failed to recapitalized. It stressed that it would ensure thorough oversight on how successful companies invest the funds raised in the exercise.
It noted that all funds raised in the recapitalization would be paid into an escrow account domiciled in the CBN, stressing that funds from companies that failed to recapitalized would be returned to investors from whom the companies sourced the funds.
According to NAICOM the funds realized from the recapitalization is expected to help stimulate the accumulation of long-term funds for infrastructural financing; job creation and an improved Return on Investment (RoI).
The regulator noted that having successfully negotiate the hurdles presented by the recapitalization exercise, the industry would witness the emergence of a vibrant, viable and active insurance market that would bring about not only an increase in penetration but a substantial increase in the industry’s contribution to Gross Domestic Product (GDP).
NAICOM posited that it would continue to introduce new reforms and initiatives in the march towards achieving the full potential of the industry, stressing that the insurance sector in Nigeria, with a contribution to the nation’s GDP at less than one per cent has underperformed its potential especially when compared with other sectors in the financial services industry.
Investigations also revealed that most of the Chief Executive Officer (CEO) of insurance firms are still wondering what they would be doing with the huge funds that would accrue to them from the recapitalization. Many of them are worried that they are under trading with the funds they have in their kitty presently.
To them, it would have been appropriate for the industry regulator and the government to put in place full enforcement of insurance laws which would have help expand the insurance scope and return more premiums to the industry.