NAICOM Recalls Circular on Insurance Tier-Based Recapitalisation
The apex insurance regulatory body, National Insurance Commission (NAICOM), has recalled a circular directing stakeholder in the insurance industry to implement tier-based recapitatilsation.
The recall and subsequent suspension of the implementation of the Tier Based recapitalisation exercise of insurance industry follows the injunction issued by the Federal High Court restraining the commission from going ahead with its Tier Based Minimum Solvency Capital (TBMSC) framework.
The development has no doubt nullified the case in court, as it seems the shareholders, who had earlier taken the regulatory body to court, has no basis to continue the court case.
In a circular issued by the commission and signed by its Director, Policy and Regulation, Mr. Agboola Pius, on behalf of the Commissioner for Insurance, Alhaji Mohammed Kari, on Friday said: “Pursuant to the powers conferred by the enabling laws, the commission hereby withdraws and cancels the circular dated August 27, 2018 with reference number NAICOM/DAPCIR/14/2018 and titled Tier Based Solvency Capital Policy for Insurance Companies in Nigeria.”
The Commission added that the withdrawal and cancellation of the proposed policy takes immediate effect.
This means that Non-Life Insurance Firms are to continue to operate with a minimum of N3 billion capitalisation; Life Insurance Operators to maintain N2 billion and Composite Insurers are to maintain N5 billion minimum capital base.
There was already a pending case filed by Sir Nnamdi Nwosu and Seven others Vs the National Insurance Commission, demanding the regulatory body to suspend its tier based recapitalisation exercise.
While the Tier based recapitalization exercise was adjudged to have been the best policy to restructure insurance industry, market observers kicked against the four months deadline given to underwriters to recapitalise under the TBMSC, hence, the shareholders went to court to challenge the regulator on the exercise.