With the ongoing recapitalisation in the insurance industry, only 10 insurance companies may remain standing, of the 57 operating now, The Nation has learnt.
This will occur as majority may be unable to meet the new capital requirement.
The newspaper learnt that while some will lose their operational licence, others may be acquired or form a merger.
NAICOM had on May 20, 2019 given insurance companies a 13-month ultimatum to recapitalise or lose their licences.
The ultimatum raised the minimum paid-up share capital of a Life insurance company from N2 billion to N8 billion; Non-Life insurance from N3 billion to N10 billion and Composite insurance from N5 billion to N18 billion. Re-insurance companies on their part, were directed to raise their capital base from N10 billion to N20 billion.
With the directive, the capital injection requirement rose by 400 per cent (Life); 333.33 per cent (Non-Life); 360 per cent (Composite) and 200 per cent (Re-Insurance).
Presently, Chief Executive Officers and other Board members are full of regrets, anguish and sorrow following the announcement of the order of recapitalisation by NAICOM.
They regret turning down the Tier Based Minimum Solvency Capital (TBMSC) policy meant to recapitalise and reclassify insurance company’s policy, offered to them by the regulator.
Unlike the order for paid-up share capital, the tier-based plan would have allowed the companies to carry out businesses that they have capacity to underwrite.
But some operators and shareholders resisted the offer and dragged the regulator to court, leading the regulator to withdraw the policy. They claimed the policy was not backed by law.
Some of the chieftains in the industry who spoke with The Nation on condition of anonymity, condemned the actions of the CEOs, boards and shareholders.
One of the chieftains lamented that after the commission was forced to cancel the Tier Based policy, operators and other stakeholders went to sleep without trying to reach out to the regulator on the way forward.
He said the operators are now crying foul praying that the regulator should bring back the Tier Based policy which they initially shot down.
He pointed out that the operators too did not engage themselves, which he said they would have done under the auspices of their umbrella body, the Nigeria Insurers Association (NIA).
He said: “After NAICOM was forced to cancel the Tier Based, we did not bother to engage ourselves, neither did we engage NAICOM. Although the Commission too did not talk to us, we ought to seek their audience and make them to talk to us.
“After the shareholders sponsored by some operators drag the commission to court, we should have known better that we cannot fight our regulator and expect nothing to give way.”
Another CEO said: “As it is now, many companies will not survive with the increase in paid-up share capital unlike the Tier Based, that would have allowed companies operate the business based on the risk they can carry.’’