NAICOM forecloses issuance of licences to new insurance firms
May 20, 2011 BY JOSHUA
Wants investors to buy into existing underwriting outfits
THE National Insurance Commission (NAICOM) may have foreclosed issuance of licences to new insurance companies.
Rather, the regulatory body advised potential investors in the nation’s insurance industry to come and invest in existing insurance entities or buy-over existing underwriting firms.
The Commissioner for Insurance, Fola Daniel, who spoke to The Guardian in Lagos on Wednesday, said that the number of insurance companies in the country were too many, hence, potential investors, both local and foreign, wishing to invest in the market should invest or buy over existing underwriting firms.
As at May 31, 2007, there were 67 life, non-life and reinsurance firms operating in the country with minimum capital base of N2 billion for life offices, N3 billion for non-life underwriting firms and N10 billion for reinsurance companies.
Daniel, who spoke on the backdrop of divestment of banks from insurance institutions, said: “In the last two years, we have been receiving enquires from foreign investors who want to invest in this market. Nigeria is a big potential market on account of our population of 150 million. They made request for issuing new licences, which we refused because there are many insurance companies judging by the level of insurance penetration.
“Rather they should come and invest in existing companies, this is an opportunity for them to realise their goal of being part of the Nigerian market by investing or buying-over existing underwriting firms.”
On the divestment of banks from the insurance institutions, the NIACOM boss explained: “We want to engender a continuing interest and confidence of the populace in the insurance institutions. For that reason, it is very important for us to bring on board or to ensure that only trustworthy and credible investors are taking over the vacuum to be created by the exit of the banks, because we need to sustain customers’ confidence in the industry.”
He added: “We must also bear in mind the risk of the anti-money laundering legislation. Insurance profession requires you to practice under the principle of utmost good faith, no other business has such importance rule, but under the contract, the principle of utmost good faith is paramount, it is more on the side of the insurance companies.
According to him, “it is very important that the owners must be people of integrity, people who can engender confidence of the people in other to exploit the huge potentials of this market. We foresee a stronger insurance industry emerging after this divestment, and it is not only open to local business but to the international entrepreneurs”.