First Bank of Nigeria Insurance Limited has advocated the need for the regulators to enhance the capital base of insurance companies operating in Nigeria.
Speaking in an exclusive interview with our correspondent in Lagos, at the weekend, the Chairman of FBN-Insurance, Mrs. Adenrele Kehinde, said the inflationary trend in the economy had affected all shades of business and the insurance industry was not left out.
According to her, this will create competitiveness in the Insurance industry and enable them play adequately in the local and international markets.
Kehinde said, “I will definitely support the call for the recapitalisation drive of companies in the insurance industry, as this is the only way to sanitise the sector and distinguish the men from the boys. The capital base for the insurance companies operating in the system must increase.”
The FBN-Insurance boss noted that the unethical and sharp practices of the companies operating in the insurance sub-sector had badly eroded the confidence of the investing public.
She explained that it would be a breath of fresh air if the expected recapitalisation and increase in the capital base of the insurance companies was reintroduced by the regulators, adding that this would create a good and befitting level-playing ground for the insurance companies in the
market.
“What we have now are companies operating in a system with a very weak capital base, and not able to pay claims based on the aforementioned reason. This is because they are not in the position to do so. The capital base operating in the system as at today is quite small and minimal. The type of business being done by the insurance organisations such as in the oil and gas sector needs a huge capital base to be secure,” she
said.
In the area of annuity, she said the regulators had requested all the companies involved in it to make extra 30 per cent provisioning as a backup for the people involved, and for these reasons, the capital base presently operating in the system is no longer
tenable.
