Abuja, Oct. 24, 2023 – Tony Elumelu, the Chairman of UBA Group, has called for increased capital requirements for insurance companies in Nigeria.
Elumelu gave the advice while speaking at 2023 National Insurance Conference in Abuja on Monday.
He suggested that the minimum capital requirement for insurance companies be increased to N20 billion for life insurance operators and N30 billion for non-life operators.
He also suggested N1 billion for insurance brokers.
Elumelu, who is also the Chairman of Heirs Insurance Group, said that the current capital requirements of N8 billion for life insurance operators and N10 billion for general insurance practitioners were too small.
“With the devaluation of the currency, you are talking about USD 8 million, USD10 million capital requirements for an insurance company in Africa’s largest economy.
“How can an industry intended to ‘insure’ and mitigate the risks associated with economic growth of a country have such low capital requirements,” he said.
Elumelu also identified poor and inadequate legislation as another factor for the poor insurance practice in Nigeria.
He said that the poor legislation did not allow for proper enforcement of insurance laws and implementation of compulsory insurance.
The poor legislation, he said, had also encouraged inefficient insurance processes and poor claims settlement which, in turn, had engendered public’s lack of confidence and trust in insurers.
Elumelu called for a review of the 2003 Insurance Act to drive the implementation and enforcement of compulsory insurance in Nigeria.
He also identified poor insurance culture as another factor hindering robust insurance practice in Nigeria and called for change of the mindset of insurance practitioners.
“We need a mindset change in the industry. We need to increase the capacity in the sector.
“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, creative areas like Nollywood etc and other sectors are.”
Elumelu denounced the current poor state of Nigerian insurance industry, particularly its 1% contribution to the nation’s Gross Domestic Product (GDP).
“This is worrying, Nigeria is a country of 200 million people who all need insurance products, whether for health, protecting lives and livelihoods or savings.
“Insurance has a strategic role in our country’s future and development.
“A healthy, trusted, and innovative insurance sector should be the mechanism for creating savings and channelling these savings into the infrastructure investments our country needs.”
Elumelu said the insurance regulators and the government had a critical role to play in making insurance a common right of every Nigerian citizen.
“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.
“In a society where people are not insured, they are exposed to financial uncertainties that not only affect them, but their families and communities,” he said. (GBN)
