A FEDERAL High Court sitting in Lagos, has held that the National Insurance Commission, NAICOM, cannot increase the statutory minimum solvency capital policy for insurance companies without the National Assembly amending the Insurance Act and Regulation 2003.
Trial judge, Justice Chukwujeku Aneke, made the order in a judgment in the suit filed by rights activist and lawyer, Tope Alabi.
The court also directed NAICOM to reverse itself on the increase in the statutory minimum solvency capital policy for Insurance companies.
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According to the judge, the directives/guidelines/circular on capital base increase offends Section 4 of the 1999 Constitution and Section 9 of the Insurance Act and Regulation 2003.
Alabi had sued NAICOM and Attorney-General of the Federation, AGF, in the suit.
The suit followed NAICOM’s announcement in 2018, that it planned to release the Guidelines for the implementation of the minimum solvency capital policy in August, 2018, while implementation was meant to take effect from January 1, 2019.
NAICOM, on August 27, 2018, released a Circular with No. NAICOM/DAPCIR/14/2018, wherein it divided the categories of business for insurance companies as provided for in the Act into tier-based respectively.
The plaintiff contended that NAICOM prescribed tier-based minimum solvency capital for insurances on the bases of their respective risks profiles and their risks management systems, adding “The Circular reflected an insurance of life Insurance Business to N6billion; Businesses to N3billion; and oil and gas Insurance Business to N9billion, respectively.”
The plaintiff had asked the court to determine “Whether the increase in the statutory minimum solvency capital policy for all Insurance companies and the short or inadequate time within which to comply was not steps taken by the 1st defendant in bad faith,” among others.
He had also prayed the court to direct NICOM to reverse itself on the increase in the statutory minimum solvency capital policy for Insurance companies in Nigeria on ground that the directives/guidelines/circular on capital base increase run fouls of the provisions of Section 4 of the Constitution of the Federal Republic of Nigeria, 1999 as altered and Section 9 of the Insurance Act and Regulation 2003.”
Granting the plaintiff’s prayers, Justice Aneke, held: “After reading Section 7 of the National Insurance Commission Act, I am of the view that NICOM, acting under the National Insurance Commission Act, have no powers to increase the paid up share capital of the various categories of insurance companies stated in Section 9(1) of the Insurance Act because such increase will be inconsistent with Section 9 of the Insurance Act.
“I am fortified in this view by Section 61 of NICOM Act. I am also of the view that NICOM has no vires to divide insurance companies into tier levels. I also hold that the plaintiff has the locus standi to institute this suit.”