Massive job loss looms as six insurance firms conclude merger talks
Strong indications emerged that there may be massive job loss in Nigeria’s insurance industry over recapitalisation deadline, which has forced six companies to conclude plans to merge as part of efforts to shore up their capital base.
Recall that the National Insurance Commission NAICOM had given insurance companies operating in the different segments of the industry numbering about 57 up to June 30, 2020, which was recently extended to December 31, 2020 to shore up their revenue bases or face severe sanctions. These 57 firms are made up of 14 specialist life insurance firms, 28 general insurance companies, 13 composite insurance companies and two reinsurance companies.
Under the new recapitalisation regime, firms in the life insurance category are to raise their capital from N2billion to a minimum of N8billionn while those in the general insurance business are to increase from N3billion to N10billion, even as composite insurance firms and reinsurance companies are to raise their capital bases from N5billion to N18billion and N10billion to N20billion respectively.
Punch Newspaper had report that a total of six insurance companies have already notified the NAICOM of their intentions to merge as part of efforts to meet the deadline. According to the Paper, only six firms out of a total of 44 that have been reviewed so far have indicated interest in mergers and acquisitions.
Meanwhile, an insurance expert, who spoke to our reporter on condition of anonymity, raised fresh fears that many workers in the industry would be at the receiving end, as many of them would have to be sacked in the process, a development that may worsen the already high unemployment rate in the country.
He noted that the workers have always been at the receiving end in such circumstances, citing similar circumstances, especially in the banking industry where banks were asked to shore up capital base, which ultimately led to reduction in the number of branches loss of jobs on the part of workers.
He further explained that in such merger or acquisition transactions, the number of branches of the merging firms would drastically be reduced, which means that workers in the affected branch are already at the risk of being sacked.
“In a layman’s language, recapitalisation means increasing the capital base or share capital of the company by pooling resources together, reduce the cost of operations by reducing the workforce and thus make the emerging company more financially solid and profitably too”
“But in as much as many members of staff of the companies must be laid off, efforts must be made by NAICOM, the apex regulatory agency of the Federal Government to ensure that the insurance companies do not shortchange their workers by paying all their entitlements promptly.
He therefore charged the leaderships of the major workers’ unions especially Association of Senior Staff of Banks, Insurance and Financial Institutions ASSBIFI and Nigeria Union of Banks, Insurance and Financial Institutions Employees NUBIFIE to work in tandem with other labour unions including the Trade Union Congress TUC or the Nigeria Labour Congress NLC to ensure that the workers to be disengaged are fairly treated.