Shareholders in the nation’s insurance industry have continued to kick against the recent introduction of Tier-Based Minimum Solvency Capital (TBMSC) by the authorities of the National Insurance Commission (NAICOM) saying that the regulatory body lacks the statutory powers to amend the insurance Act.
The shareholders who spoke on the floor of the annual general meeting of Sovereign Trust Insurance Plc in Lagos said that the returns in investment in insurance companies does not justify the continuous increase in underwriters’ capital outlay.
Beside, some of the shareholders argued that the introduction of the TBMSC was a clever way of trying to increase the capitalization levels of insurance companies without an amendment of the law.Mr. Tom Ogboi who is a shareholder in Sovereign Trust Insurance Plc argued that the prevailing insurance Act has a clearly defined lines for insurance companies wondering why the categorization under the TBMSC would be seen as been superior.
According to him, NAICOM would be required to secure an amendment to the laws before altering the structure of the industry.
Mr. Ogboi said that no form of regulations would take precedent to established laws.Besides, he observed what he called wrong timing by NAICOM in pushing for a new regime of capital increase.“The timing is wrong. The economy doesn’t seem to be ready for it now. I think that this kind of thing should be looked into again after the election”, he noted.
Under the new Tier-Based regime proposed by NAICOM, companies will 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 Suretyship 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.Composite companies in Tier3 will maintain N5 billion; Trier 2 N7.5 billion and Tier 1 will have N15 billion.
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