Nigeria’s insurance regulator, the National Insurance Commission (NAICOM), has said that it may require insurance companies struggling to meet higher capital requirements to merge, rather than allow the weakest to fail.
An industry expert, though, questions whether NAICOM’s plan can be realised.
Insurance consultant Ekerete Ola Gam-Ikon, said that it was “very doubtful” that NAICOM would be able to force mergers through, according to an article in Africa Business Report. The regulator already has five insurance companies under its management for which it has not been able to find interested investors. “When they offer no special value, it is difficult to force them onto others,” he said.
Mr Ola Gam-Ikon also said that any insurer going through a forced merger process would have huge unpaid claims already known to the public, and there is no reason why people would want to give such an outfit their business.
Forcing through mergers would transfer existing problems at weaker insurers into new structures. The weakest should be allowed to fail.
NAICOM is raising the minimum capital requirements for insurers. The deadline for compliance has been postponed from the end of June to 31 December.
Source: Middle East Insurance Review
