Ekerete Ola Gam-Ikon is a Nigerian insurance personality and the Chief Executive Officer of Finterate Projects. In this interview with THE WHISTLER, Gam-Ikon spoke on the need to review the capital requirements of insurance companies in Nigeria. The CEO also identified challenges in the industry which has dampened the confidence of Nigerians as well as the way forward.
What is your opinion on the call by Tony Elumelu for the capitalisation of insurance companies from N8bn to N20bn for life insurance and from N10bn to N30bn for general insurance?
It is a very bold call from Tony Elumelu, unfortunately, due to the bad experiences of National Insurance Commission (NAICOM) with respect to recapitalization of this nature, the regulator proceeded to adopt the Risk-based Supervision system.
Under the Risk-based Supervision system, insurance companies will be required to work with the Risk-based Capital model that stipulates that the type of risks they can underwrite would be based on their capital. NAICOM has indicated this is the direction it will go and implementation is considered for 2024.
The other thing to note is that many insurance companies have more capital than what NAICOM contemplated, so I think any insurance company that sees the opportunities and seeks to pursue, them should do it without waiting for the regulator to pronounce. We need leading insurance brands in Nigeria to express such boldness if the market must grow.
Do you think insurance companies have the capacity to raise such capitalisation?
Yes, I think they do, especially those with foreign interests because they see the opportunities and are determined to explore and exploit them. If we want to retain those businesses that cause us to lose premium to the foreign market, we need an increase in capital.
Notwithstanding, we have argued repeatedly that low capital is only one of the challenges in the industry, other issues like low capacity and expertise amongst professionals and lack of succession planning need to be addressed urgently. All Special Risks areas including Aviation, Cyber, Marine, Oil and Gas and Terrorism are still seeking professionals with the appropriate capacity to handle them within the market.
Should insurance companies merge in order to deliver better value to Nigerians?
Insurance companies need to merge but only mergers that would deliver value and not the type we have been having to help keep jobs.
Do you think regulation for the industry is strong enough?
No, regulation is still weak. There is still a lot of work to do to ensure insurance companies pay claims promptly and give the insuring public confidence in the insurance companies they relate with. For example, financially weak insurance companies should not be allowed to continue doing business as if they are strong.
As a stakeholder in the industry, what are the major challenges bedevilling the industry?
The critical challenges of the insurance industry in Nigeria are numerous and include the inability of the leadership to make it attractive, low creativity in product development, weak regulation and low innovation in the adoption of digital technology; above all, ineffective communication!
To overcome these challenges, the industry needs to open up and admit professionals who have the solutions.