NAICOM suspends Tier-Based recapitalisation over court injunction

Insurance regulator, the National Insurance Commission (NAICOM) on Thursday announced the suspension of implementation of the Tier-Based Minimum Solvency Capital (TBMSC) Policy for the insurance industry, pending the determination of the suit filed against the policy by a group of shareholders.

NAICOM in circular to all insurance institutions in Nigeria signed by Leonard Akah, director, Authorization & Policy, on behalf of the Commission for Insurance  said  “In compliance with the extant rules and the injunction issued by the Federal High Court regarding the Tier Based Minimum Solvency Capital Framework which was to take effect from October 1, 2018, the Commission wishes to clarify that the status quo will be maintained and insurers are to continue to operate on the subsisting regulatory framework prior to the circular.”

The omission also said in the statement that appropriate regulatory directive would be advised upon conclusion of the suit.

A federal High Court in had on September 13 ordered NAICOM to stop the implementation of its proposed minimum solvency capital policy scheduled to take effect pending the expiration of a 30-day pre-action notice.

Justice Muslim Hassan gave the order in a class action brought by some shareholders of insurance companies in Nigeria, challenging the new minimum solvency capital policy proposed by the NAICOM.

At the hearing, counsel to the applicant, Bert Chucks Igwilo, told the court that they had filed and served the NAICOM a pre-action notice on Sept 6. Justice Hassan gave the order and adjourned further hearing to Oct 8.

NAICOM had had on July 25, 2018 announced a raise in the minimum capital base for life, non-life and composite insurance companies seeking to get licences to underwrite all risks in the country from N2bn, N3bn and N5bn to N6bn, N9bn and N15bn, respectively under its tier-based minimum solvency capital structure.

It later announced an October 1, 2018 deadline, which was not accepted by stakeholders, pushing them to take a legal action against the commission.

Modestus Anaesoronye