Experts propose 10-year recapitalisation roadmap for insurance industry

An expert has proposed a 10-year recapitalisation roadmap for the insurance industry that will enable life insurance companies raise their capital to N20 billion; general operators N30 billion, and composite firms N50 billion.

 
Adebayo Adeleke, managing director, Lancelot Ventures Limited, who is also a shareholder in many insurance firms, stated this at the third National Conference of the National Association of Insurance and Pension Correspondents (NAIPCO) in Lagos.

 
He said 3-tier recapitalisation roadmap should be clearly thought out and spanned for a 10-year period.

 
According to Adeleke, the first phase of recapitalisation should be within a period of 18 months and Life Underwriters should raise their capital from N2 billion to N4 billion; General Business Operators, move from N3 billion to N5 billion.

 
Continuing, he said in the second phase, which should be three years after the first exercise, Life operators should move their capital to N8 billion; Non-life, N10 billion, and Composite, N18 billion.

 
He maintained that in the third phase, which should be five years after the second recapitalisation exercise, Life Underwriters should beef-up their capital to N20 billion, General Business underwriters, N30 billion and Composite firms, N50 billion.

 
He called on the National Insurance Commission (NAICOM) to evolve templates and incentives for mergers and acquisitions to enable strong firms absolve weak ones, as against waiting for firms to be bankrupt, and then take over the management.

 
In a similar vein, Bala Zakariya’u, past president, Chartered Insurance Institute of Nigeria (CIIN), charged regulators in the financial services industry to create the enabling environment for mega companies to be established through mergers and acquisitions, saying, “Such mega financial institutions are to be tasked with higher capital and solvency, sophisticated information technology infrastructure, best in class human resources and strong brand presence.”

 
Zakariya’u further said the mega institutions should also have better all-round capacities and connections as well as cognate strategies to deepen market penetration and enhance finance inclusion.

 
While fears may be expressed that creating mega institutions may lead to the emergence of ‘companies that may be too big to fail,’ which, is every regulator’s nightmare,’ he believes ‘this ought to be a preferred nightmare than what we currently have by default: companies that are too small to succeed.’