Tony Elumelu, Chairman, Heirs Insurance Group, called for the urgent recapitalisation of insurance companies in Nigeria, as part of a six-point agenda to completely transform the insurance industry.
He made the call on Monday, October 23, 2023, at the 2023 National Insurance Conference, organised by the insurance regulators, NAICOM, in Abuja.
Elumelu began his keynote speech by commending the Commissioner for Insurance, Sunday Thomas, for his foresight and courage in tackling the critical shortcomings of the industry, while encouraging him to do more.
During his presentation, he stated that the current capital base requirement limits the capacity and capabilities of key players in the industry. To address this, he proposed an upward review of the capital base from N5m to N1bn for brokerage firms, N8bn to N20bn for Life insurance companies and from N10bn to N30bn for General Insurance companies respectively.
He said: “This recapitalisation is not about increasing the barriers to entry into the industry. We must ensure that the sector has the financial muscle and backbone to handle more complex insurance transactions”.
Elumelu also called for a review of the dichotomy in insurance licences between life and non-life companies that has hindered the progress of the industry. He charged the regulators to open the offering of composite licences, adding that consolidated operators could operate with a capital base of N50 billion.
In addition to the points, Elumelu also highlighted poor legislation, stifling policies, and inefficient claims processes, as barriers to achieving sustainable growth in the industry. He challenged all insurance companies to jointly commit 0.5% of revenue to drive industry-wide awareness and acceptance campaigns.
Commenting on the talent and workforce within the industry, Elumelu called for a change in approach. According to him: “We need a younger and more agile workforce. We have so many young people, but the insurance sector is not attractive to them in the way banking, oil and gas, fast-moving consumer goods, IT/technology, and creative areas like Nollywood are. We need to attract the youth of our country into the sector.”
In conclusion, Elumelu emphasized the critical role that regulators and the government must play in making insurance a common right of every Nigerian citizen. He added: “It is embarrassing that Nigeria has less than 2% insurance penetration, in a nation of over 200 million people, struggling to survive, amidst the harshest economic realities. We must reassess and eliminate the stifling policies, roadblocks, and complacency in the insurance system, to encourage innovation and provide our people with simple and accessible insurance, not as an option, but as a fundamental right to secure their future”.