The National Insurance Commission (NAICOM) on Tuesday advised insurance companies in the country to continue to operate on regulatory framework subsisting prior to the issuance of the circular on Tier-Based Minimum Solvency Capital (TBMSC) last July.
This latest regulatory advice was conveyed to all insurance companies through a circular titled ‘Update on the Implementation of the Tier-Based Minimum Solvency Capital Policy for Insurance Companies in Nigeria’ signed by the commission’s Director, Authorization and Policy, Leonard Akah.
NAICOM stated that its position was informed by the extant rules and the injunction issued by the Federal High Court regarding the TBMSC framework which should have taken effect from October 1, 2018.
While advising the operators to maintain the status quo ante, the commission maintained that appropriate regulatory directive would be advised upon conclusion of the suit.
The commission had in July this year released new guidelines on TBMSC which classified the business of insurance.
According to the guidelines, companies were to be classified based on their 2017 financial accounts. In this vein, Tier 3 companies are those that falls within existing paid up capitals of N2 billion for life business; N3 billion for non-life business and N5 billion for composite business.
Also, under the proposed regulatory framework, companies in this category will be limited to underwrite only risks in life business in the following areas – Individual Life, Health Insurance, Miscellaneous Insurances; while for non-life they will be limited to underwrite risks in these areas – Fire, Motor, General Accident, Engineering (only classes covered by compulsory insurance), Agriculture and Miscellaneous Insurances. Tier 2 companies are those whose paid up capital has increased by 50 percent above the existing minimum capital.
For life business, their paid up capital will be N3 billion and they are to underwrite all Tier 3 risks and Group Life Assurance (GLA); while for non-life, their paid –up capital base will be N4.5 billion and they will underwrite all Tier 3 risks, Engineering (All inclusive), Marine, Bonds Credit Guarantee and Surety ship Insurances.
Tier 1 companies are those whose paid up capital has increased by 200 percent, above the existing minimum requirement. Life companies in this category will have capital of N6 billion, and will underwrite all Tier 2 risks and Annuity. While for non-life business, the paid up capital will be N9 billion, and will underwrite all Tier 2 risks and Oil & Gas (oil related projects, exploration & production), and Aviation Insurances.
Composite companies in Tier3 will maintain N5 billion; Trier 2 N7.5 billion and Tier 1 will have N15 billion.