Increment of Capital base in insurance company crucial, Finance minister insists

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, on Monday said the recapitalisation of the insurance industry would reduce risk of insolvency and protect policyholders in the sector.

The minister said this in Abuja at the opening session of a meeting of the Association of African Insurance Supervisory Authorities.

The National Insurance Commission had in a circular announced new capital requirements for operators in the insurance industry.

In the circular to its regulated entities, life insurance companies’ capital was raised from N2bn to N8bn, general companies got a raise from N3bn to N10bn, while composite insurance companies’ capital was raised from N5bn to N18bn

Addressing delegates at the event, Zainab said the recapitalisation of the insurance industry was one of the many initiatives the Federal Government was implementing to reposition the sector to boost economic growth.

In view of the objectives of government for the sector, she said the recapitalisation was necessary to increase safety and soundness of the system as well as strengthen the financial position of the companies.

She also said the government was implementing the ‘no premium no cover’ policy to facilitate reduction in outstanding premium, improve liquidity position of insurance companies and ensure prompt payment of claims.

Ahmed said a financial inclusion initiative was also being implemented through micro insurance and Takaful insurance products.

This, according to her, wss intended to bring insurance services to the underserved segments of the society.

She said, “It is informative to state that a veritable approach towards a healthy competitive private sector economy is the enhancement of the structure of government-led supervisory framework.

“In other words, it is believed that where supervisors are ahead of the institutions they regulate in relation to operations and conducts, then achieving growth, volumes and impacts on the economy becomes easier.

-Punch