The National Insurance Commission (NAICOM) on Thursday announced the suspension of the implementation of its Tier-based Minimum Solvency Capital policy, known as the recapitalisation of the industry.
The commission announced the suspension of the policy in a circular to all insurance institutions titled‘Update on the implementation of the Tier-based Minimum Solvency Capital policy for insurance companies in Nigeria’
The industry regulatory institution stated: “In compliance with the extant rules and 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.
“Appropriate regulatory directive will be advised upon the completion of the suit”, it added
It would be recalled that some shareholders of insurance companies had filed a suit at the Federal High Court in Lagos seeking the non-implementation of the new recapitalization policy.
The judge of the court, Justice Muslim Hassan, had on September 13, 2018 gave the order in a class action brought by the shareholders restraining NAICOM from enforcing the TBMSC policy, pending the expiration of the 30-day pre-action notice dated September 4, 2018.
At a sitting on October 8, the judge adjourned hearing in the case to October 22.
The NAICOM had on July 25 this year announced the increase 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 N2 billion, N3 billion and N5 billion to N6 billion, N9 billion and N15 billion, respectively under the proposed tier-based minimum solvency capital structure.
Industry analysts believe that the announcement by the commission of October 1, 2018 as compliance deadline on the recapitalization policy jolted some stakeholders who later approached the court to restrain the regulator from enforcing the deadline.
