The flurry of objections channelled against the successful completion of the first phase of the recapitalisation programme has coalesced to a temporary halt to the programme with an interim court order served to halt the process pending the determination of the suit challenging the process. Consequently, the National Insurance Commission, is obeying the court order as a law abiding institution, according to Mr Rasaq Salami, Head, Commissioner for Insurance Directorate and spokesman.
The first phase of the recapitalisation of insurance and reinsurance companies would have been concluded today, as it’s customary, by 12 midnight. It got underway after the gun was fired lifting insurers and reinsurers off the blocks, but the race has gone through bends rough and undulating stretch and the participants are racing with some expecting abrupt halt, and that has been granted by court order. Long before the halt, it was the slam dunk of Covid-19 pandemic on the whole world and the subsequent disruption to social and economic systems that forced the National Insurance Commission the second time, to review the dates of closing the exercise from December 31, 2020 to September 2021.
The change in the date for insurance and reinsurance companies to comply with the new share capital was then commended by the Nigerian Insurers Association as a good move in the right direction, while at the same time, seeking for constant engagement in the ongoing recapitalisation. Under the schedule of compliance in the first phase, insurance companies are expected to meet cash payment of no less than 50% of the minimum new level of share capital, while reinsurance companies are required to come up to 60% as they play the role of quarterbacks position (seen in the American football,) for the primary insurers.
The new capital regime would have been rolled up today. Up 50% for insurers and 60% for reinsurers, the share capital strength of qualified operators. The qualified operators in the insurance market would have been placed on the starting blocks to begin the race to come to 100% full and approved minimum capital for all operators: life insurers N8bn, general business N10bn, composite N18bn and, N20bn for reinsurers. That would have been the expectation at the end of the recapitalisation programme in September 30, 2021.
However, they were hurdles and rivers to cross. These challenges were expected in the form of mergers, acquisitions or industry request for review of timetable or other industry demands coming from the trade body of the insurers and reinsurers, seeking for special interests for their members or palliatives that meet the specific demands of their members at the levels of the big, medium and small players to allow them fit into the programme without avoidable casualty. The ultimate hurdle has become the latest court order halting further action from the Commission. Before the court action, The House of Representatives had passed a resolution requesting NAICOM to shelve the December 31, 2020 deadline, citing difficulties in raising funds. It was an objection but unenforceable. The resolution was followed with a letter, but NAICOM remained on course.
Penultimate to the court order, was a letter despatched to the Commission by the Nigerian Insurers Association, in line with it’s engagement with the Commission, two days to the initial D-Day to the closing of December 31, 2020 deadline, seeking further clearance on the first phase and developments and possible spin-off.
The letter by the Director General NIA, Mrs. Yetunde Ilori, captioned, “Segmentation of Minimum Paid up Share Capital of Insurance Companies in Nigeria: Appeal For Waiver of December 2020 Milestone,” was set in the tone of lack of information on the updates on the scheduled timetable that the midway was to be attained by the end of today.
NIA dose of complaint was that its members and other stakeholders were expecting the Commission to escort the end of the first phase with further directives before the curtain drops. The NIA streams it’s concern thus: “This is underscored by a fast-approaching deadline and everybody is being kept in a suspense, which is not helping the market at the moment.”
While the recapitalisation programme subsists, the NIA during the recent public hearing on Insurance Bill 2020, a private member’s bill, had in its input demanded for risk based supervision. It’s position was based on what operates in other developed markets and the position of the IMF in 2013 when the Naira was not at the distance it is now in exchange with the Dollar. The direction that NIA is pushing for is same with the Commission, but the regulator wants the share capital review as the foundation and concluded before the risk based supervision, which incidentally is where the developed market is currently operating.