By Modupe Gbadeyanka
The National Insurance Commission (NAICOM), the regulatory agency of the insurance sector in Nigeria, has been directed to put a hold on its proposed minimum solvency capital policy for insurers in the country.
This directive was given on Thursday by Justice Muslim Hassan of the Federal High Court sitting in Lagos.
On August 27, 2018, NAICOM, through a circular with number NAICOM/DAPCIR/14/2018, informed insurance firms that their operations would now be reclassified into tiers, noting this would be based on minimum solvency capital on the basis of their respective risks profiles and their risks management systems.
The policy was expected to take effect from January 1, 2019, but the regulator last shifted the date back to October 2018.
Also, NAICOM also asked boards of insurance companies to submit their resolutions on this policy by September 14, 2018 (today).
But some key stakeholders in the sector; Mr Sunday Nwosu, Mr Adeniyi Adebisi, Mr Moses Oke, CAC Okpara, Mrs Ayodele Kudaisi, Mr Kenneth Nwosu, Mr Issac Obarinde and Mr Okechukwu Nwaguru, filed a suit before the court to stop the implementation of the policy.
They alleged that the proposed policy, passed in the circular, would affect the business and corporate existence of insurance companies and force them to sell their shares at an undervalue.
In addition, they claimed that the policy was aimed at forcing licensed insurance businesses to increase their paid up share capitals by 100 percent or face losing their investments.
In addition, they alleged that the proposed policy in the circular was inconsistent with the provisions of Section 25 of the National Investment Promotion Commission Act, 2003.
At the hearing yesterday, the applicants, through their counsel, Mr Bert Chucks Igwilo (SAN), told the court that they had filed and served the NAICOM a pre-action notice on September 6.
He further said that the applicants had before the court, an originating summons ex-parte, restraining the commission from enforcing the proposed policy pending the expiration of the pre-action notice.
Mr Igwilo stated that the originating summons ex-parte was supported by an affidavit sworn by an applicant who was a shareholder in Aiico Insurance Plc and Cornerstone Insurance Plc.
He added that attached to the ex-parte application was the originating summons, the applicants intended to file at the expiration of the pre-action notice.
“My Lord, I humbly apply that the defendant be stopped from implementing the policy pending when we file and serve our processes else it would be too late,” he said.
Meanwhile, Justice Hassan has adjourned further hearing to October 8, 2018.
