Financially Weak Insurance Companies Can Pose Risks-CEO, Finterate Projects
Financially Weak Insurance Companies Can Pose Risks-CEO, Finterate Projects
Gam-Ikon spoke on the need to review the capital requirements of insurance companies in Nigeria. The CEO also identified challenges in the industry which has dampened the confidence of Nigerians as well as the way forward.
Due to the bad experiences of National Insurance Commission (NAICOM) with respect to recapitalization of this nature, the regulator proceeded to adopt the Risk-based Supervision system.
The other thing to note is that many insurance companies have more capital than what NAICOM contemplated, so I think any insurance company that sees the opportunities and seeks to pursue, them should do it without waiting for the regulator to pronounce. We need leading insurance brands in Nigeria to express such boldness if the market must grow.
Do you think insurance companies have the capacity to raise such capitalisation?
Yes, I think they do, especially those with foreign interests because they see the opportunities and are determined to explore and exploit them. If we want to retain those businesses that cause us to lose premium to the foreign market, we need an increase in capital.
Notwithstanding, we have argued repeatedly that low capital is only one of the challenges in the industry, other issues like low capacity and expertise amongst professionals and lack of succession planning need to be addressed urgently.
All Special Risks areas including Aviation, Cyber, Marine, Oil and Gas and Terrorism are still seeking professionals with the appropriate capacity to handle them within the market.
He also said, Insurance companies need to merge but only mergers that would deliver value and not the type we have been having to help keep jobs.
No, regulation is still weak. There is still a lot of work to do to ensure insurance companies pay claims promptly and give the insuring public confidence in the insurance companies they relate with.
The critical challenges of the insurance industry in Nigeria are numerous and include the inability of the leadership to make it attractive, low creativity in product development, weak regulation and low innovation in the adoption of digital technology; above all, ineffective communication!
To overcome these challenges, the industry needs to open up and admit professionals who have the solutions.
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