Insurance sector not under threat - NAICOM
The National Insurance Commission, NAICOM, has dismissed insinuations of a looming collapse of five insurance companies operating in the country, insisting the listed companies are financially strong and solvent
The commission’s rebuttal comes after a media report that solvency ratio of five, out of 12 Nigerian insurers companies have fallen below regulatory threshold.
A national daily had reported that the five insurers whose solvency ratio are below the threshold are Aiico Insurance Nigeria Plc with solvency ratio of 55 percent, First Bank Insurance Plc with a ratio reportedly at 59.10, percent, Lead way Assurance Limited: with 76percent, NEM Insurance Plc, 93 percent and Continental Nigeria Plc which the report also said currently stands 90 percent.
The report noted that any insurance firm whose insolvency ratio is below the minimum level automatically lose the ability to settle all claims from its clients in an extreme situation.
Describing the report as false and misleading, the Deputy Director and Head, Corporate Affairs, of the commission, Mr. Rasaaq Salami, said while not holding brief for any company, “NAICOM, being the apex Regulatory and Supervisory body of the insurance sector in Nigeria do hereby refutes this claim in its entirety.”
Salami in a statement titled: “Re: Solvency ratio of 5 Insurers fall below regulatory threshold,” said the five companies mentioned in the publication are financially strong and solvent. “With the benefit of hindsight, the report is not only false but misleading as the stated solvency ratios are at variance with the true position,” he said.
Section 24(2) of the Insurance Act 2003 stipulates that the solvency margin of an Insurer shall not be less than 15 per centum of the gross premium income less reinsurance premiums paid out during the year under review or the minimum paid up capital whichever is greater.
“Suffice it to say that the solvency test of the financials of insurance companies in Nigeria is based on the provision of extant laws. The Commission reiterates that members of the press should always explore all avenues to verify their facts before going to bed to avoid misleading the public,” the statement added.