Three operators in the insurance industry on Tuesday supported the call for recapitalisation of firms in the insurance industry but two kicked against it, saying the move would fail.
The operators spoke with the News Agency of Nigeria (NAN) against the backdrop of the call by the Minister of Finance, Mrs Kemi Adeosun that insurance firms should recapitalise.
Adeosun said that the industry’s under-performance was denying the country an incremental growth of 1.5 per cent to the Gross Domestic Product (GDP) annually.
The minister spoke at the ongoing National Insurance Conference (NIC) on Monday in Abuja.
Adeosun stressed that an active insurance industry was capable of generating over 70, 000 jobs annually.
The Director- General, Nigeria Insurance Association (NIA), Mr Sunday Thomas, said the association was in support of the recapitalisation exercise.
Thomas said that recapitalisation should be risk based suggesting that a company making a profit of N2 billion and another making N5 billion should not have same recapitalisation mode.
Mr Mufutau Oyegunle, the Managing Director, LAKEG consultants, said recapitalisation at this time was inevitable.
Oyegunle said that the service delivery of insurance companies had been mutilated due to lack of funds.
He said that operators do not have enough fund to procure necessary technology for distribution and payment system.
He said, “The world has gotten to a point that physical payment has become inefficient.
“The ability, on online and mobile appliances is what is required for the next level of competition.”
According to him, this means insurance companies need more money to invest in technologies.
The Chairman, Insurance Industry Consultative Council (IICC), Mrs Yetunde Ilori said the era was right for the recapitalisation in insurance Industry.
Ilori said, “Less than 10 per cent of the 57 insurance companies have actuary department that deals with assessment and management of risk for financial investments, insurance policies, and any other ventures involving a measure of uncertainty.
” We need more funds to establish such departments.”
But the President, West Africa Insurance Brokers, Mr Rotimi Edu, said that the time was not a good for recapitalisation because of inflation.
According to him, there is need to wait for the outcome of the President Muhammed Buhari’s restructuring process before embarking on recapitalisation.
“There is hardship in the economy. It’s good the industry awaits the outcome of the restructuring and sees positive indices before calling for recapitalisation.
Similarly, Managing Director, Industrial and General Insurance (IGI) PLC , Mr Rotimi Fashola said there was no need for recapitalisation in insurance industry
Fashola said the move would not work because existing investors had not been receiving good returns on their investment.
“No investor will want to invest in a business that does not generate enough funds.”