The decision by the National Insurance Commission (NAICOM) to revise backward, the recapitalisation deadline from January 1, 2019, it had earlier fixed, to October 1, 2018, is causing ripples in the industry.

According to THISDAY, some operators are threatening legal action against NAICOM.

This is just as the Nigeria Insurers Association (NIA) disclosed that 5.8 million out of the 11.7 million registered vehicles plying Nigerian roads have fake insurance.

At the forefront of the move to take legal action against NAICOM are chief executives of insurance firms that fall within the tier two and tier three categories.

They described the backward revision of the deadline by NAICOM as a deliberate attempt to disrupt the plans and programmes they had put in place to meet the initial deadline of January 1, 2019.

One of the chief executives who pleaded anonymity said the commission had warned that any insurance chief executive that speaks to the media would be heavily sanctioned.

NAICOM had on July 25 announced increase in minimum capital base for insurance companies, giving January 1, 2019, as deadline for companies to upgrade their capital to the type of business they want to do.

But in announcing the change in earlier deadline, the commission in a separate circular dated August 27, 2018 stated, “In the exercise of the powers conferred on the commission under extant laws, it hereby issues this circular for the introduction of the tier-based minimum solvency capital requirements, for assessment of capital adequacy and solvency control levels of all insurance companies in Nigeria, with effect from October 1, 2018."

Aside the shift in deadline, operators also kicked against the use of their 2017 solvency accounts for the exercise.

However, analysts at CSL Stockbrokers Limited have warned that, although the recapitalisation of the insurance industry was long overdue considering the deterioration in the capital of underwriters since the last recapitalisation exercise was carried out in February 2007, it was, however, practically impossible for underwriters to meet up with the latest deadline in view of the duration involved in raising capital amidst the current negative sentiment from investors’ in the equities market.

•Excerpted from a THISDAY report