The National Insurance Commission has placed an embargo on the issuance of licences to new insurance companies.
The Commissioner for Insurance, Mr. Fola Daniel, who said this, explained that the step became necessary in order to strengthen existing insurance companies to become big entities that would be able to bear bigger risks, instead of breeding new ones.
Daniel said, “We are hesitant to give new licences to start new companies because we want to grow bigger insurance companies. Silently, there are some ongoing mergers and takeover decisions within the insurance industry, and we are monitoring them, closely. A lot of companies are seeing the need to build bigger and vibrant companies, rather than the small individual players available now.”
He noted that efforts of the commission to foster the sector’s development were becoming more visible, especially in the area of market development, innovation in product development, war against fake insurers and unethical practices, tough stance on non-compliance with policy guidelines and drive to ensure consumer protection.
The commissioner said that NAICOM recently entered into a collaborative agreement with GIZ, a German agency for sustainable development, to conduct a diagnostic study on micro and ‘takaful’ insurance in Nigeria.
This, he added, was part of NAICOM’s drive to open up and develop the insurance market at the grass roots and increase the sector’s contribution to the Gross Domestic Product.
He stressed the need for insurance companies to maximise the opportunities available in the local market.
The commissioner, who observed that many of the firms had gone ahead to open shops outside the shores of the country, said that NAICOM would start to consider that the companies first expand their base in the country before giving them the licence to open offices abroad.
Daniel said, “Many of the companies have gone into countries that do not have enough insurable risks, like Nigeria, our market has not been fully maximised. Yet, we are ensuring measures that will deepen the insurance penetration in the country.”