The federal government yesterday warned firms in the insurance sector against any action targeted at undermining the recent directive for recapitalisation of insurance and reinsurance companies and urged the operators to embrace mergers and acquisitions.
President Muhammadu Buhari gave the warning yesterday while declaring open in Abuja, the ongoing 2019 National Insurance Conference, with the theme: “Disruption, Innovation and Business Growth.”
He said instead of working against the success of the exercise, operators should explore available options, including mergers and acquisitions, as means of achieving their continued existence.
His warning came on the heels of threats by some investors and operators to challenge the industry regulator’s bid to increase the industry’s minimum paid up share capital by over 300 per cent.
President Buhari said his administration would prefer to see the operators utilising avenues that would help upgrade their capital rather than fighting the policy through any means.
He also said the Ministry of Finance would collaborate with National Insurance Commission (NAICOM) and insurance sector stakeholders to achieve 40 per cent financial inclusion rate by the year, 2020.
According to the President who was represented by the Permanent Secretary of the Ministry of Finance, Mahmud Isah-Dutse, “the insurance Industry has rules and regulations that all insurance companies must follow and this will cause them to struggle to understand and implement the rules, new technologies and innovations.
“With the recapitalisation directive issued recently, we expect operators to be truthful to themselves and consider all opportunities available for continued existence. While this could include mergers and acquisitions, it should not include fighting the policy just because you cannot raise the additional capital.”
Speaking on financial inclusion, he said “as you are aware, it is a major policy thrust of this administration to ensure poverty reduction and financial inclusion of the majority of Nigerians hitherto excluded from the financial services.
The president said NAICOM would roll out various initiatives with the objectives of strengthening the institutions and increasing the spread of insurance companies in the country.
He said that the insurance industry had undergone series of reforms of recent, which include introduction of products and services such as the microinsurance, Kakafu insurance and Bancassurance, among others.
“Insurance companies are now facing serious challenges in the current competitive environment and these calls for market innovation, creating new services, prompt delivery of services to customers that will lead to growth and development of the industry,” the president stressed.
On his part, the Commissioner for Insurance, Alhaji Mohammed Kari, stressed the need for the insurance industry to remain relevant in an era of dynamism.
In a welcome address, the Chairman of the Insurance Industry Consultative Council, the organisers of the conference, Eddie Efekoha, said reforms required the collaborative efforts of governments, businesses and other stakeholders in order for the process to be truly successful.