FG urges Insurance Operators to Obey Recapitalization Policy.
The Federal Government has urged operators in the insurance industry to obey the recapitalization policy as part of measures to reposition the sector.
President Muhammadu Buhari stated this while declaring open the 2019 National Insurance Conference with the theme: Disruption, Innovation and Business Growth”.
President Buhari however called on the operators to seek options including mergers and acquisitions as avenues of raising the required capital.
Speaking on financial inclusion, President Buhari also said that the Federal Ministry of Finance would liaise with National Insurance Commission (NAICOM) and insurance sector stakeholders to achieve 40 Percent rate by the year 2020.
President Buhari who was represented by the Permanent Secretary of the Ministry of Finance, Dr. Mahmud Isah-Dutse, said “The insurance Industry has rules and regulations that all insurance companies must follow and this will cause them to struggle to understand and implement the rules, new technologies and innovations.
“With the recapitalization directive issued recently, we expect operators to be truth to themselves and consider all opportunities available for continued existence. While this could include mergers and acquisitions, it should not include fighting the policy just because you cannot raise the additional capital.”
“As you are aware, it is a major policy thrust of this administration to ensure poverty reduction and financial inclusion of most Nigerians hitherto excluded from the financial services.
“The federal ministry of finance will collaborate with the National Insurance Commission and the industry stakeholders to ensure that the target 40 Percent of inclusive rate by the end of 2020 is achieved as contained in the 2018 Reversed National Financial Inclusion Strategy.”

He said the conference came at an auspicious time as the Federal government through the National Insurance Commission (NAICOM) is rolling out various initiatives with the objectives of strengthening the institutions and increasing the spread of insurance companies in the country.
“Insurance companies are now facing serious challenges in the current competitive environment and these calls for market innovation, creating new services, prompt delivery of services to customers that will lead to growth and development of the industry”, the President stressed.

In his remarks at the occasion, the Commissioner for Insurance, Alhaji Mohammed Kari, noted that the theme is very pertinent against the backdrop of the need for the Nigerian insurance industry to remain relevant in an era of dynamism where operating in the same way is an assured route to irrelevance.
According to Kari “The need for radical reforms has been accentuated by the disruptive impact on the insurance industry of a series of digital innovations in areas such as online sales technologies, machine learning, the Internet of Things, advanced analytics and virtual reality, among others.

While these new technologies are already making it easier for consumers/policyholders to benefit from superior service and more choice as well as lower prices, there are corresponding challenges.
“For example, cyber risk and crimes, determination of liability in driverless car accident, emergence of inter-sectoral competitors as well as disruptive social and technological changes.
“Therefore, in order to remain relevant and become a critical contributor to the national economy, the industry must consciously be proactive and organized so as to take advantage of the opportunities provided by these disruptive developments while at the same time curbing their corresponding negative impacts.”
Kari noted that operators will only benefit from digital technology only if they embrace its potentials along the entire insurance value chain, including underwriting and claims management.
He said the need to exploit the opportunities of digitalization and to tame the cumulative consequence of inflation and devaluation of the Naira heightens the necessity for the ongoing reforms of the insurance industry such as, expansion of the insurance distribution channels, financial inclusion, corporate governance enforcement, market discipline, professionalism and the recapitalization exercise aimed at strengthening insurance institutions and increasing the spread of insurance in the country.
In his welcome address, the Chairman of the Insurance Industry Consultative Council, Eddie Efekoha pleaded with the NAICOM to consider reasonable suggestions by the Nigeria Insurers Association towards the recapitalization process.
He said, “As we commence this round of recapitalization, I plead with the National Insurance Commission to give favorable consideration to the suggestions made by the Nigerian Insurers Association.