Ogun­biyi seeks govt sup­port for in­sur­ance in­dus­try

The Punch - - INSURANCE -

THE Chair­man, Mu­tual Ben­e­fits As­sur­ance Plc, Dr Akin Ogun­biyi, has said there is need for the Fed­eral Gov­ern­ment to pa­tro­n­ise and sup­port the Nige­rian in­sur­ance in­dus­try.

said this dur­ing an in­ter­view with our cor­re­spon­dent.

He said that cap­i­tal was not the prob­lem con­fronting the Nige­rian In­sur­ance in­dus­try as it al­ready had the high­est op­er­at­ing cap­i­tal in the African con­ti­nent.

Ac­cord­ing to him, other coun­tries with higher in­sur­ance con­tri­bu­tions to their coun­tries Gross Do­mes­tic Prod­ucts did not have the kind of cap­i­tal base that the Nige­rian op­er­a­tors had.

He said, “The in­sur­ance in­dus­try cur­rently em­ploys about three mil­lion peo­ple. If you have one in­sur­ance com­pany that is able to re­cap­i­talise, will that take the place of the 10 that will go out of op­er­a­tion? No.

“Many of the com­pa­nies have not fo­cused on fin­tech and re­tail busi­ness. All they fo­cus on is cor­po­rate in­sur­ance and their bal­ance sheet.

“This re­cap­i­tal­i­sa­tion pol­icy will kill the in­dus­try if the pol­i­cy­mak­ers, the Fed­eral Gov­ern­ment, min­istry of fi­nance don’t quickly wake up and see that this is a ret­ro­gres­sive move.

“Cap­i­tal base is not the only way to make in­sur­ance cre­ate value and be more rel­e­vant in the na­tional econ­omy.”

He said that it would be dif­fi­cult for most of the com­pa­nies to raise the new cap­i­tal.

The group man­ag­ing di­rec­tor also ex­pressed con­cerns that for­eign in­vestors were buy­ing the com­pa­nies at peanut.

He said, “Why will I bring N18bn to get an in­sur­ance li­cence and go through all these mal­prac­tices of op­er­at­ing in the in­dus­try when I know by putting N1bn in Fed­eral Gov­ern­ment bond, I am guar­an­teed 13 per cent.

“We have quoted in­sur­ance com­pa­nies that have not been able to pay div­i­dend in the last 10 years.”

While ex­press­ing con­fi­dence that Mu­tual Ben­e­fits would meet what­ever cap­i­tal re­quire­ments set by the in­dus­try, he said it was im­por­tant to con­sider what the ef­fect on the in­dus­try would be at large.

He said, “There is prob­lem of con­fi­dence for re­newal of busi­ness for this Jan­uary. The bro­kers that con­trol 95 per cent of the mar­ket are in dilemma to­day.

“They know the ca­pac­ity of the com­pa­nies. Only about five com­pa­nies are in the thresh­old. Can they ab­solve the en­tire risk of the whole coun­try?”

Ac­cord­ing to him, if an in­dus­try was work­ing with N5bn and was not able to use it for prof­itabil­ity, they may still not use the N18bn well.

Ogun­biyi said the ex­er­cise was a de-ser­vice to the in­dus­try.

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