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  • Business - Companies
  • Updated: July 25, 2020

Four Companies To Enter Insurance Market Amidst Decongestion, Disappointment

Four Companies To Enter Insurance Market Amidst Decongestion

Four companies will enter the saturated insurance market in Nigeria, the National Insurance Commission (NAICOM) has revealed. The companies have filed to make a play in the insurance market which has been a drag for many years due to the low acceptance of insurance by Nigerians.

The companies are Heirs Insurance Limited, Stanbic IBTC Insurance Limited, Heirs Life Assurance Limited and Enterprise Life Assurance Company (Nig.) Limited.

According to NAICOM, registration of these four companies have began, as they have sent their applications to the market regulator.

Once the registration is done, Heirs Insurance Limited, Stanbic IBTC Insurance Limited, Heirs Life Assurance Limited and Enterprise Life Assurance Company (Nig.) Limited will begin to operate in the insurance market, but with different focus - the market is split into the following categories; Life, Non-Life and Composite insurance.

[READ ALSO: Just In: Stanbic IBTC To Establish New Subsidiary]

These Companies Coming Amdist Decongestion, Disappointment

The insurance market has been undergoing recapitalisation since last year. The recapitalisation requires insurance and reinsurance companies to increase their capital base. The purpose is to strengthen the markets and decongest it, as it's expected that weak companies who are not capable of raising the capital base will exit the market or merge with rivals.

NAICOM's new capital requirements for all insurance companies operating in Nigeria are; for Life insurance, it was increased from N2 billion to N8 billion, for Non-Life insurance, it was increased from N3 billion to N10 billion, and for Composite insurance, the capital was increased from N5 billion to N18 billion, while reinsurance was increased from N10 billion to N20 billion.

It is believed that if the new capital requirement is met, the insurance market will reach its potential, as it's currently struggling to get Nigerians onboard. That's why Nigeria is far behind South Africa and Kenya. Despite the population size of Nigeria, the insurance market have recorded less clients and success when compared to South Africa.

[READ ALSO: Dangote Cement Suffers Revenue Loss As Cost Drag Profit Down]

Insurance Companies Criticise NAICOM

The decision to raise the capital of companies hasn't gone down well with stakeholders in the market, as they believe the new capital could push some companies out of the market, thereby, affecting the competitive nature of the insurance market. This is one of the criticism that has been directed at NAICOM.

In order to avoid losing out, companies are forging alliance by merging and consolidating their services - this will keep them operational, Cornerstone Insurance had said in reaction to the new capital requirements. Mutual Benefit Assurance had also spoken against the policy, asking NAICOM to cancel the new capital requirement or extend deadline to meet the recapitalisation.

Although, NAICOM has now extended the deadline to December 31, 2020 for the first phase, which requires the insurance companies meet 50%, while reinsurance firms will have to meet 60%. The deadline for the second phase is slated for September 30, 2021, then, all the insurance and reinsurance companies are expected to have met 100% of the new capital base.

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