Premium flight raises concern for more mergers, acquisition

The lack of capacity to undertake high profile risks in aviation, oil and gas industries by local insurance companies, which has led to huge premium flights from the Nigerian market, is raising concern about the need for more mergers and acquisition.

It’s being argued that the nation’s insurance industry may not be able to attain its full potential and contribute reasonably to the nation’s GDP if the industry continues to operate as fringe players.

The expectation therefore is that companies in the industry should begin to embrace mergers and acquisition to create capacity and the needed synergy to explore huge ticket risks particularly in the oil and gas sector.

“Let operators find ways of merging their operations with a view to building stronger companies with financial muscles to underwrite mega risks across the country, industry analyst said.

Fola Daniel, insurance commissioner, had told BusinessDay during an interview that in implementing the risk-based supervision in the insurance industry, the Commission would be more comfortable supervising fewer and bigger insurance companies.

He said the Commission would continue to encourage mergers and acquisitions in the market because it would enhance capacity and bring more synergy to explore big ticket risks.

Daniel said that though the number of insurance companies has reduced from about 115 before the 2007 recapitalisation to about 59 companies currently, he added that looks forward to “a time when the number will come to say, twenty or less.”

By: Modestus Anaesoronye