Ogunbiyi seeks govt support for insurance industry
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.