Finance Minister Mrs Kemi Adeosun yesterday urged insurers to recapitalise to reverse the sector’s underperformance.
In her opening remarks at the Insurance Industry Consultative Council (IICC) National Insurance Conference, at Transcorp Hilton, Abuja, she challenged insurers to take a pill of their own medicine as risk managers by taking recapitalisation risk.
She said this has become imperative to immediately address the decline in the industry as it is lagging behind among its global and African peers despite operating in the largest economy in Africa.
She said there is an estimate that the sector can create as many as 70000 new jobs, adding that to achieve this feat, there is need to take concrete actions. The imperative to act now is very strong, Mrs. Adeosun said.
She said government must however act as a natural incubator for necessary growth in the areas of compulsory insurances.
She said: “A developed and active insurance industry will bring about increase in GDP (gross domestic product), accumulation of long term fund for infrastructure financing, job creation and improve the standard of living. Part of the things that has contributed to the industry to underperform is low awareness, unhealthy competition, lack of innovation among others.
“We need to strengthen the capital base of the insurance industry. Operators should not see recapitalisation as a punitive measure or aim to disenfranchise them but see it as an opportunity to reposition for the future. Recapitalisation produces opportunities for partnership and other strategic alliances.
“As insurers, you need to take a risk and recapitalise. The industry manages risk and they must be ready to take risk themselves. There is no alternative. The industry is evolving and I see the opportunities. But the challenge is for you to take concrete actions that need to be taken quickly for us to realise the potential of the industry.”
Also speaking, the Commissioner for Insurance, National Insurance Commission (NAICOM), Mohammed Kari said the Commission has tackled the immediate issues challenging the industry.
“The Commission has continued to provide regulatory oversight for the industry in relevant areas through the issuance of guidelines, training and the creation of the enabling regulations to introduce new classes of insurance (products) to address the financially disadvantaged in our society.
“To address the medium and long term challenges of penetration, the Commission is on the verge of re-launching the Market Development and Restructuring Initiative (MDRI). The initiative originally launched in 2009 is being reviewed for the immediate impact we believe it will provide. We believe if properly implemented, it will bring the desired result as envisaged.
“This effort has further been boosted by the just concluded review of the draft Insurance Bill by the ministerial committee setup by the Minister of Finance, the presidential directive on insurance of government assets and the Senate resolution supporting the enforcement of compulsory classes of insurance across the country.”
He added that the industry has also resolved to rebrand itself and create more distribution channels
He said while efforts and consultations have reached advanced stage with the various agencies, including state governments towards the enforcement of these classes of insurance, I am happy to report that the Minster has consented to chair the grand launch of the enforcement campaign.