PRESIDENT Muhammadu Buhari on Monday approved the National Insurance Commission (NAICOM’s) directive for the recapitalisation of the insurance firms. He urged the operators not to fight the policy.
Represented by the Permanent Secretary, Federal Ministry of Finance, Dr. Mahmud Isa-Dutse, spoke at the ongoing Insurance Industry Consultative Council’s 2019 National Insurance Conference at Transcorp Hilton Hotel, Abuja.
He said with the recapitalization directive, it is expected that operators will be true to themselves and consider all regulation available for their continued existence.
Buhari said insurance companies are facing many challenges in the current environment and as such, they should realise that market innovation and performance of duties such as creating good services and prompt delivery of those services to customers would facilitate the growth and development of the industry.
He further said the Ministry of Finance will continue to collaborate with NAICOM and the industry to ensure that the target of about 40 percent penetration rate at the end of the year 2020 is achieved as contained in the 2018 revised Financial Inclusion Strategy.
He said it is imperative to say that this is an industry target where all stakeholders will be expected to work in unison to attain.
In this regard, he expects the various arms of the sector to support and work with the regulator to ensure the realisation of this and all set targets.
Buhari said: “With the recapitalisation directive in the country, we expect operators to be true to themselves and consider all regulation available for their continued existence.
“It should not include fighting the policy just because you cannot raise the required capital. Your industry should be more responsive to the economy. the industry can do more to contribute to the development of Nigerian economy, we can do more to
“Insurance companies are now facing many challenges in the current constituted environment and as such realised that market innovation and their duty such as creating good services, prompt and delivery of those services to customers would facilitate the growth and development of the industry.
“This administration is very excited about the recapitalisation and other reforms in the industry and asks the ministry to continue to closely monitor activities in the sector. The insurance industry issues regulations that all insurance companies must follow and this will cause them to understand and implement the new technologies and innovations that can help the sector. However, NAICOM must design ways to acknowledge changes to the existing businesses, considering that we live in a technological human age where technology enhances businesses for profit in the organisation.
“We must also put in place strategies to mitigate and control such risks so that technology in the insurance sector can be fully realised.”
Consequently, President Buhari raised four questions for operators at the conference to explore in order to start building the strategy for companies to adopt.
He asked that to what extent can they use technology first of all to transform the goal structure of the business system; to what extent will it mitigate the disruption to satellite in the industry; to what extent will it give back to new value propositions and markets; and to what extent will building technology give back to the industry?
“In possession of these question, also ponder on the Federal Government’s expectations of insurance companies which includes increased financial capability to enable local retention; prompt payment of claims; transparency in dealing with quotation policyholders to consumer consumer first; expansion in time consuming insurance policies to better address clients’ needs; increased numbers on outreach of specific sectors such as non-relevant segments; and expansion of the operations to cover the country.
Commissioner for Insurance, Alhaji Mohammed Kari said from the regulatory standpoint, the need to exploit the opportunities of digitalisation and to tame the cumulative consequence of inflation and devaluation of the naira heightened the necessity for the ongoing reforms of the insurance industry. He said expansion of the insurance distribution channels, financial inclusion, corporate governance enforcement, market discipline, professionalism, and the recapitalidation exercise were aimed at strengthening insurance institutions and increasing the spread of insurance in the country.
These reforms are in furtherance of the Buhari administration’s determination to revamp the economy as encapsulated in the ERGP in order to ensure that the insurance industry becomes a significant contributor to the economy of Nigeria, he added.