By Adedapo Adesanya
The National Insurance Commission (NAICOM) has set a September 2021 deadline for insurance companies across the country to complete their recapitalization process.
The commission made this known in circular numbered; NAICOM/DPR/CIR/25-04/2020, dated Wednesday, June 3, 2020, and sent to all insurance and reinsurance companies.
In the notice signed by its Director, Policy and Regulation, Mr Pius Agboola, entitled Segmentation of Minimum Paid-Up Share Capital Requirement for Insurance and Reinsurance Companies in Nigeria, NAICOM noted that the COVID-19 pandemic has affected the previous deadline of December 2020.
As a result, there have been a review of the recapitalisation deadline in order to mitigate likely negative consequences of the pandemic on the exercise.
The commission also segmented the ongoing recapitalisation process for insurers and reinsurers, directing them to meet 50 and 60 percent respectively of their minimum paid-up share capital by December 31, 2020, and complete the process by September 30, 2021.
This means NAICOM has extended and segmented the recapitalisation process into two phases which allowed 50 percent of the minimum paid-up capital for insurance and 60 percent for reinsurance to be met by December 31, 2020, while the operators are to fully comply with the approved minimum paid-up not later than September 30, 2021.
NAICOM maintained that insurance companies that fail to satisfy the required minimum paid-up capital by the end of December 31, 2020 may be restricted on the scope of business they will be allowed to transact afterwards.
The commission then tasked the insurance and reinsurance firms to ensure they fully comply with the approved minimum paid-up capital by September 30, 2021.
In 2019, NAICOM introduced new capital for insurance and reinsurance companies, which directed life insurance companies’ to bump up their capital from N2 billion to N8 billion.
General companies got a raise from N3 billion to N10 billion, while composite insurance companies’ capital was raised from N5 billion to N18 billion.
The regulator also increased the capital of reinsurance companies from N10 billion to N20 billion.
Modupe Gbadeyanka