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NAICOM insists on recapitalisation of insurance firms

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Authorities at the National Insurance Commission ( NAICOM) said that they have still committed to nursing an insurance industry which have the capacity to discharge it’s obligations to it’s various stakeholders with greater emphasis on the insureds.
It is against this backdrop that NAICOM said that it is still going ahead with plans to raise the capital base of insurance and reinsurance companies in the country.
Commissioner for insurance Me Sunday Thomas who confirmed this in a recent interactive session for financial journaliststs said that insurance companies will be made to raise their share capitals in consonance with their risk exposures.
Tagged Risk Base Capitalisation, the commissioner reiterated the resolve of NAICOM not to tow the line of a blanket increase of companies’ Capita base but to rather allow insurance companies to grow their capital adequacies in terndem with their risk appetite.
According to him, the new capital regime will be part of innovations to be ushered in by the much expected consolidated insurance bill which is now before the national assembly.
It would be recalled that the 9th national assembly failed to push the insurance bill through fir the signing of the president before the expiration of it’s life span thus making the insurance industry to represent the bill to the new assembly where it has passed the second reading
Mr Thomas who expressed optimism that the bill will soon be passed into law said that it is expected to usher in monumental changes in the conduct of insurance companies to the benefit of all stakeholders.
According to him, the issues of claims administration will be properly addressed under the expected new law.

It is consequent upon this the he called on industry operators to beef up their claims reserve so that they will have enough funds to cater for claims settlement whenever loss occurs.

Claims reserve is the money set aside for a claim that has been reported but not settled (RBNS) or incurred but not reported (IBNR). An insurance company assigns a claims reserve to each file, reflecting its best estimate of the eventual settlement amount.

Speaking on the topic “Re-Awakening the Nigerian Insurance Industry through Claims Settlement,” Assistant Director, Complaint Bureau Life at NAUCOM, Mrs. Agustina Onojake, said Section (20) (a), (b) and (c) of the Insurance Act 2003 requires insurance companies to make provisions that will cater for unexpired claims and outstanding claims.

In order to re-awaken the industry through claims settlement, she urged insurance companies to beef up claims reserve to cater for claims settlement when loss occurs.

While urging compliance with Section 25 (1) and (2) (a-g) of the Insurance Act 2003 regarding Protection of Policyholders Funds, Mrs Onojake posited that “Section 25 (1) and (2) (a-g) of the Insurance Act 2003, protects policyholders fund by directing the insurers on how to invest policyholders’ funds.

“Insurance companies should strictly comply with this provision of the Act at all times to enable them to mitigate the risk of not being able to perform claims obligations when a loss occurs as a result of an inadequate investment of policyholder’s funds.”

She said the Commission had made numerous rules and regulations concerning the protection of policyholders to ensure that genuine claims are settled timely.

“The Commission,” she said, “had also established Complaints Bureau to which complaints against the insurance institution are submitted by members of the public and where complaints against insurance institutions are resolved.”

Mrs Onojake said the Inspectorate Department of the Commission had carried out several inspections on insurance institutions to enhance insurance companies’ solvency so that claims would be settled timely.

According to her, the Regulator should not relent in their functions. They should continue to make rules and regulations to enhance fair customer treatment as well as supervise the compliance of the regulations to ensure a robust claims management system. This will assist in re-awaking the insurance industry through claims settlement.