The National Insurance Commission (NAICOM) has said it is yet to receive a court order, restraining it from enforcing the October 1, 2018, deadline for the recapitalisation of the sector, under the Tier-Based Minimum Solvency Capital (TBMSC).
Last week Thursday, Justice Muslim Hassan of the Federal High Court, sitting in Lagos, had given a directive that NAICOM should put a hold on its proposed minimum solvency capital policy for insurers in the country, in a suit filed by stakeholders.
But the Commissioner for Insurance, Mohammed Kari, at the weekend, at a Seminar in Abuja, said the commission would not shy away from its responsibility of protecting policyholders and investors from any unforeseen financial crises in the future.Kari, affirmed to The Guardian that the commission has not received an order issued by a Federal High Court in Lagos, restraining it from continuing with the TBMSC in the industry.
He noted that the responsibility of the commission is not to punish operators, but to nourish them, adding that the regulator is poised to ensure that insurance industry is insulated from future financial crisis.On August 27, 2018, NAICOM, through a circular with number NAICOM/DAPCIR/14/2018, informed insurance companies that their operations would now be reclassified into tiers, noting that this would be based on minimum solvency capital on the basis of their respective risks profiles and their risks management systems.
The policy was expected to take effect from January 1, 2019, but the regulator suddenly brought back the date to October 1, 2018, a development that has irked some operators and elicited resistance.
The Director, Supervision, NAICOM, Barineka Thompson, speaking on the benefits of the policy, said the TBMSC Model is a regulatory model, designed for the application of proportionate solvency capital that support the nature, scale, complexity and risk profile of the business conducted by insurers.
He stressed that classification of business according to the present level of capital that an insurer possesses in relation to the risks that the capital can effectively be deployed to is novel.Thompson said the policy will enable soundness and profitability of insurers through optimal utilisation of capital; encourage insurers to focus on the area of their strengths and innovation; and deepen market penetration, build investors and public’s confidence in the industry.
Other benefits, he said, include to create capacity for bridging insurance gap, optimise local retention and minimise capital flight; limit significant systemic risks and build confidence in the insurance industry; supports the stability of the financial system and increase insurance contribution to the nation’s Gross Domestic Product.
He posited that all the aforementioned will be achieved without a mandatory injection of capital and no cancellation of licence, but insurers will be subject to solvency control level.
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