NAICOM suspends composite licence

NAICOM Building

The National Insurance Commission (NAICOM), has suspended the issuance of composite licence to any interested insurance investor, saying it is inappropriate to operate a composite company.

Speaking at the Nigerian Council of Registered Insurance Brokers (NCRIB) Members’ Evening, in Lagos, the Commissioner for Insurance, Mohammed Kari, said the issue of composite licensing came up at the last recapitalisation exercise in the insurance industry, but there was no clear cut way.

He therefore explained that a company would be allowed to float either a Life, or General insurance company, adding that any operator willing to do both will have them as different entities, instead of a composite licence that allowed an operator to do both businesses, using one licence.

Noting that although there is embargo on new licensing currently, he said even if the Commission wanted to grant a new licence, there will only be two licensing categories – Life licence and General licence.

While responding to the plan by NEM Insurance PLC, to add life business to its operations by applying for life licence, Kari said: “There will be no composite licence henceforth. And if we want to give a new licence, it will just be NEM Life, and NEM General, two separate companies.”

He however advised the company to buy into some of the existing life companies, as some underwriters are currently struggling financially, pointing out that there is an urgent need for recapitalisation in the industry to make companies stronger, and increase insurance penetration in Nigeria.

Kari disclosed that most companies in the industry needed some level of capital injection, while urging them to either merge with others, or be acquired rather than waiting on the regulator to force it on them.

He noted that in the last three years, only six or seven companies paid dividends, hence, there is no attraction for shareholders to insurance stocks.

Also, with the current rule of the Nigerian Stock Exchange (NSE) that allows free fall of share price to zero, he said most insurance stocks could be victims, adding that this underscores the need for the industry to shore up capital.

Earlier, the President, NCRIB, Shola Tinubu, had expressed concern over the recent reported kidnapping of 110 pupils of Government Science and Technical College in Dapchi, Yobe State, coming almost 1,407 days after the Chibok Girls were kidnapped by suspected Boko Haram members.

The brokers, he said, join both the Federal Government and multitude of Nigerians in condemning the barbaric attacks, and urged the government to intensify efforts towards the recovery of these girls.

He said it is totally condemnable that at a time the nation has started to accelerate its economic recovery goals to boost foreign investors’ confidence, such unsavoury news broke out. “Our Council wishes to stand with parents of the affected children and pray for the immediate rescue of all of them,” he said.

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