Reps Direct NAICOM To Suspend December 31 Recapitalisation Deadline

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Nigeria’s House of Representatives has asked the National Insurance Commission to suspend its deadline for Insurance and Reinsurance companies to meet the first phase of the recapitalisation requirement.

The Reps gave the directive on Tuesday following a motion sponsored by Benjamin Kalu of the All Progressives Congress (Abia).

NAICOM had increased the minimum paid-up share capital from N2bn to N8bn for Life Insurance, General insurance from N3bn to N10bn, Composite insurance from N5bn to N18bn and Reinsurance from N10bn to N20bn.

NAICOM had in a Circular with reference number NAICOM/DPR/CIR/25-04/2020, dated 3 June 2020, fixed the deadline to 31 December 2020 as a result of the impact of the Covid-19 pandemic on the economy.

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The regulator then introduced a two-phased recapitalisation programme which requires that 50 per cent of the minimum paid-up share capital for insurance companies be met by 31 December 2020, while reinsurance companies are expected to meet 60 per cent on the same deadline.

Based on NAICOM circular, the total minimum capital requirement is expected to be met on or before 30 September next year.

In defence of the sector, Kalu said, “In addition to the impact of the COVID-19 pandemic, the industry was also affected by the aftermath of the EndSARS protest in which several insured properties were affected and to this effect, most of these insurance companies have tons of liabilities to settle in order to fulfil their obligations so as not to deny the rights of these affected insured persons.

According to the Reps members, implementing the recapitalisation plan at this time, might slow Nigeria’s recovery effort.

Kalu said it was inappropriate for NAICOM to engage in the recapitalization programme due to the burden on the sector.

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He said, “These are the types of fiscal, monetary and regulatory approaches that are being adopted in most countries.

“Hence, it may not be suitable at this time for NAICOM to even proceed with its planned phased recapitalization program because of the overall impact it may have on the already fragile economy and the insurance sector.”

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