The National Insurance Commission (NAICOM) has clarified that the Nigerian Agricultural Insurance Corporation (NAIC) will continue to provide agricultural insurance despite the withdrawal of its general insurance licence.
The Commissioner for Insurance and Chief Executive Officer of NAICOM, Olusegun Omosehin, made the clarification during a media interaction on developments in Nigeria’s insurance industry in Lagos.
Omosehin explained that NAICOM’s action was limited to the general insurance licence that had enabled NAIC to underwrite insurance classes beyond agriculture.
He said NAIC’s statutory mandate to provide agricultural insurance remains intact because the corporation was established by legislation specifically for that purpose.
According to him, the Federal Government will continue to support NAIC and provide additional funding when necessary to address any shortfalls associated with the management of its agricultural insurance schemes.
“What we have withdrawn, however, is the general insurance licence that was added,” Omosehin said.
The commissioner also dismissed concerns that NAIC’s exit from general insurance would create a gap in insurance coverage, noting that other licensed insurers have the capacity to underwrite the affected classes of risks.
He said NAIC would retain its specialised agricultural insurance function, while commercial insurers would provide additional capacity for general insurance risks previously handled by the corporation.
Recapitalisation to boost risk retention
Omosehin said the insurance sector’s ongoing recapitalisation would strengthen the capacity of local insurers to retain more risks within Nigeria.
He explained that an insurer’s ability to retain risks is influenced by its capital base and its capacity to obtain reinsurance.
According to him, stronger capital positions would reduce the sector’s dependence on foreign reinsurance by enabling companies to assume a greater proportion of risks locally.
The commissioner disclosed that only two insurance companies dropped specific licences during the recapitalisation exercise after reviewing their business models and ability to raise the required capital.
He said NSIA Insurance, which previously operated as a composite insurer, surrendered its life insurance licence and was required to transfer its life insurance portfolio, including related assets and liabilities, to another licensed life insurer.
The transfer of the portfolio to CHI Life has progressed substantially, he said, with NAICOM having already issued its no-objection.
Omosehin also identified Alliance and General Insurance as another operator that surrendered its life insurance licence after assessing its capacity to meet the recapitalisation requirement.
He said the transfer of its life insurance portfolio was still ongoing under NAICOM’s supervision.
NAICOM open to credible new investors
The commissioner said NAICOM remained willing to consider applications for new insurance licences from investors with viable business proposals.
However, he stressed that prospective operators must demonstrate how their proposed businesses would expand insurance penetration and create value within the market.
“We are not shutting our doors, but we are also not looking to just dash out licences,” he said.
Omosehin said the recapitalisation exercise had encouraged existing operators and potential investors to reassess their strategies and identify opportunities to create greater value for stakeholders.
Universal Insurance licence revocation
On the revocation of Universal Insurance’s licence, Omosehin said the company failed to meet the prescribed minimum capital requirement and did not provide evidence of an ongoing capital-raising process before the statutory deadline.
He said the insurer subsequently approached NAICOM on August 14 seeking additional time to raise capital and execute a Memorandum of Understanding, but the request came after the regulatory deadline had expired.
Omosehin said NAICOM was legally unable to extend the deadline for an operator that had failed to satisfy the applicable requirements.
He nevertheless assured Universal Insurance policyholders that they would be protected during the liquidation process.
According to him, policyholders would have priority in the settlement of the company’s liabilities ahead of other creditors.
He added that the liquidation process would be conducted transparently and remain subject to regulatory oversight.
