The managing director/CEO, Consolidated Hallmark Insurance Plc, Mr. Eddie Efekoha, has charged his colleagues in the business of insurance to shore up their capital base, irrespective of the cancellation of the recapitalisation exercise by the National Insurance Commission (NAICOM).
Efekoha, who is also the president, Chartered Insurance Institute of Nigeria (CIIN), said, most insurance companies will still lose businesses they used to underwrite as policyholders seemed poised to transfer their risks to underwriting firms with strong capital base.
He stated that there is a particular transaction in Exxon Mobil for several years that never respected the N3 billion capitalisation, adding that operators whose capital were within this minimum were excluded from the business.
He noted that, recently, he was told of a broker, who said his client had informed him not to place risks with any underwriting firm with less than N9 billion as proposed in the cancelled Tier Based Minimum Solvency Capital (TBMSC) policy.
Efekoha posited that with such developments, it is now immaterial whether the industry regulator withdraws the TBMSC policy, adding that the policy has informed insurance consumers on the need to insure with highly capitalised underwriters, so that when claim arises, the insurer would be in a better financial position to pay.
Meanwhile, the Deputy Commissioner for Insurance, Mr. Sunday Thomas, felt the insurance industry needs to recapitalise in the future to be able to handle bigger risks that are now being taken abroad, urging underwriters to only carry risks they have the capacity to underwrite, on their books.
While imploring insurance companies not to wait on the regulator before they individually upgrade their capital, he said, the National Insurance Commission (NAICOM) is embittered that most of the risks in Oil and Gas, Maritime and Aviation sectors, are being taken abroad because the local underwriters have no financial capacity to underwrite such risks.
He, however, said the commission will not shield any insurer that refused to pay claims as and when due, stating that insurance companies exist to absorb risk and pay claims on insured risk.
He said, the commission will not allow few insurance companies tarnish the image of the entire industry, pointing out that most of the affected insurers, aside from the fact that they rate-cut, also bite more than they can chew, thereby, unable to pay claims when they arose.