FG to Restrict Insurance Operators to Areas of Competence
The federal government is evolving a new policy that will restrict insurance operators to their areas of competence and ability.
Commissioner for Insurance and Chief Executive Officer of the National Insurance Commission, (NAICOM), Mr. Muhammad Kari stated this yesterday at an Executive Breakfast meeting with the theme, ‘Corporate Governance and the Nigerian Insurance Industry’, organised by the Society for Corporate Governance Nigeria, (SCGN) in Lagos.
According to Kari, the new policy would introduce a “riskbased system” where companies would be restricted to their areas of competence and abilities instead of the “rule-based system” in operation, where companies operate regardless of the level of their capital.
He said the policy was being worked on and that when it was ready, “companies with capital-base of about N2 billion would restrict their operations to activities like insurance of motor cars, buildings for fire and the like, while those with higher capital base can go into oil, ship, aircraft and engineering equipment.
“What we are coming out with is going to force companies to operate within their ability to their capital asset so that the policy holder and companies are protected against their wishes to go into areas where they cannot afford.
“We are used to classify companies with the capital they can bring in but we are getting to the process of introducing risk-based classification which will try to see what your asset or capital can cover.
“I don’t see the stock market growing again, of course it is dry now, I don’t see the banking sector growing bigger but the insurance penetration is under one per cent and under one per cent contribution to the nation’s Gross Domestic Product (GDP),
“There is a lot of potentials in the biggest economy in Africa, with the population we have, you can imagine if we are able to increase our earnings and make companies responsible, you can imagine what it will be, it will help the economy, create employment and bring financial support to businesses and government."