How underwriters with N3 billion capital will lose big ticket deals
Despite the cancellation of the Tier Based Minimum Solvency Capital (TBMSC), insurance companies with N3 billion capital base will still lose the businesses they used to underwrite, as policyholders are now attracted to insurers with requisite financial strength.
The President, Chartered Insurance Institute of Nigeria (CIIN) and Managing Director of Consolidated Hallmark Insurance Plc, Eddie Efekoha, at workshop organised by journalists in Lagos, cited a particular transaction in Exxon Mobil over the years that operators whose capital were within this minimum were excluded.
He also noted that recently, he was told of a broker, who said his client had informed him not to place risks with any underwriting company with less than N9 billion, as proposed in the cancelled TBMSC policy. Efekoha posited that with such developments, it is now immaterial whether the industry regulator withdraws the TBMSC policy or not, adding that the policy has opened the eyes of insurance consumers.
“What I heard from our office recently was that there is a broker that said that my client has already seen that N9 billion is what is required, so please go and shore up. Of course, it is equally a public knowledge that even Dangote, for several years, did not select underwriters based on the authorised capitalisation by NAICOM.
“So, for clients to begin to agitate, it means that the commission and all of us have wetted the appetite of the consumer and things have to change. I want to thank the commission for seeking the wisdom to suspend or cancel TBMSC,” he said.
He noted that the commission never said the TBMSC was a recapitalisation, stressing that whatever meaning NAICOM gave, was considered differently by operators and that the initiative was a wakeup call for operators to do certain things.
“Thanks to the commission because sometimes, we ignore some certain things that we should do and focus on less important ones. The issue of TBMSC has brought about a reawakening in some of us, who were already sleeping that we must do something to help our situation,” he said.
Efekoha said he is a major beneficiary of the TBMSC, adding that this is because sometimes in a board room, managers do have challenges in getting some policies through.
“Some of us needed external force to convince those we work with that there is need to push up capital, because we Nigerians are fond of looking at holding control. So, I think that to some of us, it was a motivation. I was part of those who were sleeping, and the commission reawakened me,” he said.