The House of Representatives has directed the National Insurance Commission (NAICOM) to suspend the planned 31 December 2020 deadline for the first phase of a recapitalisation exercise by insurers. The House said the suspension should last for six months till June 2021.
NAICOM has made it mandatory for 50% of the new minimum paid-up capital for insurance companies and 60% for reinsurance companies to be met by 31 December 2020, with the second and final tranche to be met by 30 September 2021.
However, insurance companies have lobbied for the first phase requirement to be waived because of the impact on their business due to the on-going COVID-19 pandemic and #EndSARS protests in October. In fact, some insurers have gone further and suggested that they be allowed to meet the new capital requirements in a single step by December 2021.
Legislator Benjamin Okezie Kalu and 15 other lawmakers sponsored the motion for the postponement of the first-phase deadline, reported This Day. Mr Kalu expressed concerns that if NAICOM was allowed to proceed with the recapitalisation schedule as planned, it could negatively affect the economy and slow down the recovery.
He said, "In addition to the negative economic impact of the COVID-19 pandemic, the Nigerian economy was just announced to be officially in a recession. This signifies that there will be a significant slowdown in economic activities.”
He added, "In times as these, the best move by the government and by regulators is to push more liquidity into the economy in a bid to stimulate economic activities, encourage spending and prevent job losses as well as support the indigenous businesses in the country.
“This is pertinent because in addition to the impact of the COVID-19 pandemic, the industry was also affected by the aftermath of the #EndSARS protest in which several insured properties were affected and to this effect, most of these insurance companies have tons of liabilities to settle, in order to fulfil their obligations so as not to deny the rights of these affected insured persons."