By Favour Nnabugwu
Divided by no less than 32 000 km of terrestrial borders, intending insurance companies with the West African borders are required to submit requisite documents to the insurance regulatory body.
Prospective investor in Nigeria for instance must obtain an Approval-in-Principle and final approval before commencing insurance business in Nigeria from the National Insurance Commission, Naicom.
Director, Inspectorate of the National Insurance Commission, Naicom, Mr Pius Agboola who spoke on trans border operations of companies with West Africa said it is quite impossible for a company to come into Nigeria and every other country to operate without meeting the requirement of the host country.
Despite the fact that Naicom operates business-friendly regulatory environment, prospective company coming into Nigeria must respect the law regulating insurance industry.
The country’s insurance sector undoubtedly entice established foreign insurance companies to focus on doing insurance business in Nigeria but should obey the laws guiding the business.
Nevertheless, countries must respect each other insurance laws such as the capital requirement before they operate in one another’s country.
However, Agboola said that proper supervision of cross-border insurance is required to ensure a maintenance of organization in the mode of doing insurance business in Nigeria.
The Director who is also the chairman of College of Insurance Supervisors for the West African Monetary Zone (CISWAMZ) while responding to question on how CIMA countries operate, noted that it is not possible for a company to come another border without first obeying the laws for which they want to operate in
The insurance supervisors of Nigeria, Ghana, Liberia, Sierra Leone, and The Gambia have established West African Insurance Supervisors Association (WAISA) to formalise cross-border supervision in the sub-region.
He said the Association had been able to make uniform due diligence and some other initiatives but not the capital requirement of establishing a company.
Agboola said the College of Insurance Supervisors of West Africa, said the College was established to complement and implement the ideas, projects and directives of the parent body, the West African Insurance Supervisors Association (WAISA).
CIMA is the Central insurance supervisory authority in Sub-Saharan French speaking African countries. which Benin, Burkina Faso, Congo-Brazzaville, Mali, Niger, Senegal, Togo, Equatorial Guinea and the Comoros Islands.
The NAICOM-required paid-up capital for insurance companies in Nigeria is (i) general insurance business – ₦3 Billion; (ii) life insurance – ₦2 Billion; and (iii) ₦10 Billion for reinsurance business
However, the Insurance Act indirectly regulates cross-border insurance business carried on in Nigeria. The relevant sections of the Insurance Act specifically provides that “no person shall transact an insurance or reinsurance business with a foreign insurer-reinsurer in respect of any life, asset, interest or other properties in Nigerian businesses classified as domestic insurance unless a company registered under the Insurance Act”
The foreign investors, having noted these great opportunities, are attracted by the huge potential in the Nigerian insurance space.
The investors are ready to position themselves for the future, hence the likes of AXA, Prudential, Liberty, Swiss Re, SUNU Group, Saham, have taken positions in the industry and in partnership with indigenous companies for development and growth.”
On the new capital that Naicom desired for the industry but yet actualised, for life and general insurance companies, they were directed to increase from N2 billion and N3 billion to N8 billion and N10 billion, respectively, while composite insurance companies and reinsurance companies were directed to increase theirs from N5 billion and N10 billion to N18 billion and N20 billion, respectively.
In the past investors into Nigeria shore included NSIA Participations S.A Holdings,which acquired 96.15 per cent in ADIC Insurance, a former subsidiary of Diamond Bank Plc; Mutual & Federal Insurance Company, South Africa, which acquired 70 per cent of Oceanic Insurance Company Limited, formerly owned by Oceanic Bank Plc; Old Mutual Nigeria Services Company (Old Mutual Nigeria)also acquired 70 per cent of Oceanic Life Assurance Limited, a subsidiary of Oceanic Bank.
Others are UBA Capital Holding Limited/MMI Holdings, which had 50/50 per cent of UBA Metropolitan Life, formerly owned by United Bank for Africa Plc; FBN Holdings/Samlam Group SA, had 65/35 ownership of FBN Life, formerly owned by First Bank of Nigeria; Assur Africa Holding acquired 67.68 per cent of Mansard Insurance, formerly owned by GTBank; while New India Assurance Company had 51 per cent stake in Prestige Assurance Plc.
AXA SA acquired majority stake in Mansard Insurance in 2014 and changed the firm’s name to AXA Mansard Insurance; Metropolitan International Holdings (Proprietary) Limited acquired 100 per cent of UBA Metropolitan Life and changed it to United Metropolitan Nigeria Life Insurance Limited; Old Mutual completed the firm’s acquisition from Ecobank Group (after the bank acquired Oceanic Bank) and changed its name to Old Mutual Nigeria.