NAICOM may impose conditions for opening offshore branches
Specifically, the Commission is coming up with a new policy that any underwriting company seeking approval to establish a subsidiary in any African country must first open four branches of the company in Nigeria.
Sources at the Commission told The Guardian that the new policy became necessary to assist in the development of the local market in Nigeria.
A survey conducted by the Commission, according to sources, revealed that about four states in Nigeria do not have the presence of an insurance organisation, while insurance companies are daily applying to set up branches in other African countries.
He said: “In line with the policy of the National Insurance Commission for local market development, the issue has been that we don’t have the presence of an insurance organisation in three or four states in this country, but then we have about 10 Nigerian insurance companies in Ghana, and the total branches of Nigerian insurance companies in other parts of Africa have grown from 29 to 37 to date. We are in Kenya, Uganda, Liberia not to mention a few.”
According to him: “NAICOM is saying fine, thank you, we want to capture Africa market, but first you may realise that for every insurance company that will open in Kenya, you need to open four in Nigeria. Once you meet that condition then you are free. The point is that this country has a population of over 140 million and there are huge market potentials in this country yet to be exploited. We have to develop this local market to drive deep insurance penetration in Nigeria.
“Besides, the objective of the Nigeria insurance market development and restructuring initiative is designed also to create about 250,000 jobs, lower the insurance gap from the current 94 per cent to 70 per cent and ensure an improvement in the level of appreciation of insurance business by the populace, as well as increasing the contribution of insurance to the country’s gross domestic product (GDP) from the current level of 0.72 per cent to over three per cent, and insurance premium per capita from N1, 200 to N7, 500 by 2012.”
It will be recalled that chieftains of the insurance industry, apparently to exploit avenues in which to invest the huge capital they have accumulated from the recapitalisation exercise, managers of insurance and reinsurance companies launched international alliances and relationship in the African continent aimed at expanding their business operations in order to make good return to investors.
For instance, Industrial and General Insurance PLC (IGI) has acquired 35 per cent majority stake in Society Nouvelle da Assurance du Rwanda. Also, the company is holding majority shares in the National Insurance Corporation (NIC) Limited, Uganda, Network Insurance Company Limited now renamed IGI Ghana, and Gamstar Insurance Company Limited, Gambia.
Others include Continental Reinsurance Plc with offices in Douala, Cameroun, IEI, Ghana, Mutual Benefits Incorporated Liberia, Regency Alliance Insurance, Ghana.
Chieftain of one of the underwriting companies said on the African insurance market drive: “As insurance ambassadors, our passion for excellent service and drive for greater challenges has continued to encourage us to extend our business frontiers beyond the shores of Nigeria, an experience which all can attest to the effort.
“We have promised that we shall extend and hoist the Nigerian flag in six other African countries by establishing operational offices in these places.”
By Joshua Nse