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Brokers call for increase in capital base for insurance firms
Clara Nwachukwu
Insurers have said that the increase in banks capitalisation by the Central Bank of Nigeria, has been thrown up higher challenges for the banks, with brokers also calling for increase in insurance capitalisation
Insurance practitioners, who spoke on the subject, told our correspondent that the challenges posed by the new recapitalisation would make bank operators concentrate more on their core business than looking for short cuts to profit.
The President of the Nigerian Council of Registered Insurance Brokers, Prince Feyisayo Soyewo, said on Thursday in Lagos the new capital requirement for banks, should be an indicator for the National Insurance Commission, the regulator of the insurance industry to also increase the capital requirement for the industry.
According to the NCRIB boss, since both the bank and insurance industries operate within the same financial services sector, insurance should not lag behind in the operational requirements that would suit global needs.
Besides, he noted, since the banks now also engage in insurance operations through the universal banking system, �it would do well for insurance to also increase its capital base before their operations are swallowed up by the banks with their enhanced financial base.�
Rather than continue to cry out over phenomenal increase, he urged the banks to see the daunting task ahead as another challenge, adding that only banks, which refused to see it as such, and refused to merge if need be, would crumble under the weight of the challenge.
The Managing Director and Chief Executive of NICON Insurance Corporation, Ms. Prisca Soares, insisted that apart from encouraging the insurance industry to take steps to beef up its capital base, �the increase in banks capaitalisation by the CBN has no effect on the insurance industry.�
However, she said, the increase would make the banks to be more responsive to the needs of the environment and their customers.
As a result, Soares, who spoke on Thursday, during the 2004, NICON/Brokers� Forum in Lagos, said she did not envision the incursion of more banks into the insurance industry, as had been the case since the introduction of the universal banking system.
She stated, �Now that they would be engaged in sourcing for funds to meet the new capitalisation requirement I do not see too many of them coming to buy up more insurance companies.�
Meanwhile, the NICON chief executive has enjoined brokers to continue with their support of the nation�s largest insurance player, stating that the annual forum, which began in 2001 �is designed to provide a platform to enhance the exchange of information between our organisations.�
She disclosed that NICON had benefitted immensely from the suggestions, opinion and views expressed at such fora, which had assisted management in its policy formulations.
For instance, she said that management has taken up the issue of withholding tax with the relevant government agency, which was raised at one of such fora, promising to keep the brokers informed on the developments.
The PUNCH, Friday, July 16, 2004
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