THE National Insurance Commission, NAICOM, has said that it will consider other appropriate tools to address the issue of low capital in the insurance industry, following withdrawal of the circular on Tier Based Minimum Solvency Capital, TBMSC.
NAICOM insisted that despite the withdrawal of the circular which compels insurers to be categorized into three tiers in line with their level of capitalisation, there is need for underwriters to be adequately capitalized.
Deputy Commissioner for Insurance, Technical, Mr. Sunday Thomas, disclosed this at a workshop for insurance journalists in Lagos.
He said, “Of course the TBMSC circular has been withdrawn from the market but the vision is still on. The fact remains that the operators need to be capitalized beyond their present level. But the Commission will look at its bag and use the appropriate tools to address this issue.
“This is a country with a population of over 180 million people. To operate at this level is not where we should be. We are conscious of that and we are determined in all our efforts and initiatives to move the industry to where it should be.”
Thomas stated that players in other sectors of the economy cut corners to enhance profit but insurance operators cut corners to the detriment of their income.
He said, “Banks and insurance companies are guilty of flaunting laws sometimes.
However, the banks flaunt laws to increase their portfolio, but in our case, we flaunt it to decrease our portfolio. The two are offences but one commit offence to enhance volume, the other commits offence to reduce portfolio and you start to wonder, ‘does he make any sense?
“I remember when I was a staff of one insurance company; we had a policy which is that if we think that your operation is not up to a certain standard, we don’t deal with you.
There are classes of business we wouldn’t touch because we use to have what is called portfolio analysis. At a point, we decided to do away with textile business because after we measured about three years performance, we saw what that business has done to the total portfolio of the company, and we said no more.
“I left the company and went to NAICOM and from there to the Nigerian Insurers Association, NIA, and I was toothless because there were things I could have done but because it was an association established by constitution of its people by its people for its own people, there was nothing I could do.
“However, with the little power that we have in NAICOM now, we will use it to the advantage of the market.
Whatever directive that we issue is to enhance the quality of insurance market that we have as a nation and that is the single agenda that we have and this we will pursue.”