Tier-Based Minimum Solvency Capital: FBNInsurance set to operate in Tier One
L-R: Festus Izevbizua, Chief Financial Officer; Ekpe Ukpabio, Executive Director; Val Ojumah, MD/CEO, all of FBNInsurance; Bode Opadokun, MD/CEO and Shola Osho, Head, Business Development both of FBN General Insurance; at a press conference held recently in Lagos.
FBNInsurance Group has said it will operate in tier one category when the Tier-Based Minimum Solvency Capital regime recently released by the National Insurance Commission (NAICOM) commences January next year.
The Managing Director, FBNInsurance, Val Ojumah revealed this at a media parley in Lagos today.
Ojumah who commended NAICOM’s initiative, said FBNInsurance Group of FBNInsurance Limited and FBN General Insurance Limited have the required financial muscle and capacity to operate in Tier one.
Ojumah said the latest development will go a long way in solidifying their number one position in the industry.
He said that the initiative taken by the industry regulator remains one of the best things to have happened in insurance industry in recent times as it will help address the ills in the industry.
“I want to say to you in our own point of view (in FBNInsurance Group) it is the best thing to happen in our industry. As some of you know many of our insurance companies are actually fringe players and because we have so many fringe players, we have suffered as an industry from all sorts of malpractices.
“ Some of you have looked at financials of some of these insurance companies and have seen that many of them are indeed struggling and because they are struggling, they tend to try to survive by doing whatever and this has brought shame to insurance industry. In our view, we believe that the recent statement by the regulator is intended to address several ills in the industry.
“It is to encourage insurance firms to take risk in accordance to their financial strength. As you know, insurance is not just about the practice, it is more about the shareholders’ fund.
According to him, the initiative will help build capacity for underwriters to meet claims obligations and act professionally and help push up prices of insurance stocks at the Nigerian Stock Exchange (NSE).
He said when prices of stocks appreciate in the Stock Market; insurance firms will have enough funds to pay dividends to the investor because, according to him, “that is what the investors want to hear.”
He said the firm from inception has been underwriting risks in oil and gas, marine, aviation sectors as well as annuity business.
Ojumah said firm is already in 46 locations in Nigeria, promising that within the next 16 months, they will open 20 new branches.
The Managing Director/Chief Executive Officer, FBN General Insurance Limited, Bode Opadokun, in his contribution said the Risk-Based Categorisation will help in repositioning the industry, strengthening financial positions of insurance firms and improve Return On Investment (ROI) even as he commended NAICOM for taking the bold step.
He said with the latest development insurance firms will now see the reason of engaging more competent hands such as Engineers with insurance experience who will now help in the pricing of oil and gas which he said before now was done outside the country.
Bode said the tier-based solvency capital is not intended to send any insurance firm away from the market, but to improve professionalism, competency, innovation and application of technology and make the players to play according to roles, adding that it will also eliminate the issue of rate-cutting.
He said when the issue of rate-cutting is eliminated, insurance companies will have enough fund to meet their contractual obligations and contribute significantly the nation’s economy.
Also speaking, Executive Director, FBNInsurance Limited, Ekpe Ukpabio, said the firm supports the initiative as it is going to boost public and investors’ confidence on insurance, as well as support the ongoing rebranding project.
He also applauded the National Insurance Commission (NAICOM) for the new Risk Based capital model, noting that the development will help to reposition the industry financially to contribute to the national development.
Ukpabio said the new regulation will encourage insurance companies to work together to increase their financial strength and capabilities that will make them able to absorb more risk, adding that very soon very good things will begin to happen in the industry.
