The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, has Monday defended the recapitalization exercise in the insurance Industry, pointing that it has become necessary to ensure soundness of the system as well as strengthen the financial position of the companies.
Armed, explained that the recapitalisation exercise among other things would reduce risk of insolvency and protect policyholders in the sector.
Speaking in Abuja at the opening session of a meeting of the Association of African Insurance Supervisory Authorities, the minister noted that 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 microinsurance 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.
“For us in Nigeria, one of the priority sectors in the diversification strategies of the economy from an oil-dependent economy is the agricultural sector which has also recorded sustainable growth and development.
“It is therefore commendable to note that this annual meeting also flanks a workshop on index-based agricultural insurance which I hope will be beneficial to the agricultural value-chain of our various countries.”
She said many economies had been restructured to strategically recognise the potential dividends of regional cooperation and integration, adding that Nigeria would always support any framework that fostered mutually beneficial ties with other countries.
Recall that 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