Why NAICOM suspends issuance of composite insurance license to investors

While reacting to the plan of NEM Insurance PLC to add life business to its operations by applying for life license, he said: “There will be no composite license henceforth…..

The Commissioner for Insurance and CEO of National Insurance Commission (NAICOM) Alhaji Mohammed Kari, has explained why it placed embargo on issuance of composite license to any interested insurance investors.

Kari, disclosed this in Lagos recently while attending
the Nigerian Council of Registered Insurance Brokers (NCRIB) first quarters Members’ Evening said it is misnormal to operate a composite company.

The issue of composite licensing came up at the last recapitalisation exercise in insurance industry as there was no clear cut way. He mentioned.

Meanwhile, the Commissioner said, a company would be allowed to float either a Life or General Insurance company.

He added that any operator willing to do both will have them as different entity, unlike the composite license that allows an operator to do both business, using one license.

Although, there is embargo on new licensing now, he said, even if the commission wants to grant new license, there will only be two licensing categories, namely, Life license and General License.

While reacting to the plan of NEM Insurance PLC to add life business to its operations by applying for life license, he said: “There will be no composite license henceforth. And if we want to give new License, it will just be NEM Life and NEM General, two separate companies.”

He however advised the company to buy into some of the existing life insurance companies as some underwriters are currently struggling financially.

He pointed out that there is a strong need for recapitalisation in the insurance industry to make companies in the sector stronger and increase insurance penetration in the country.

He added that most companies in the industry needs some level of capital injection, urging some of these companies to either merge with others or be allowed to be acquired and not wait on the regulatory body to force it on them.

He disclosed that in the last three years, only six or seven insurance companies are paying dividend, hence, there is no attraction for shareholders on insurance stocks.

And with the current rules of the Nigerian Stock Exchange(NSE) that allows free fall of share price to zero, he said, most insurance stocks could be victims, saying, this is why the industry needs recapitalisation.