Reps go Insurance coverage Reform Act 2024 to guard pursuits of policyholders in Nigeria

The Home of Representatives has handed the Nigeria Insurance coverage Trade Reform Act, 2024, establishing a complete authorized and regulatory framework for the insurance coverage enterprise, and defend the pursuits of policyholders in Nigeria.

This new laws acknowledges two lessons of insurance coverage within the nation—life and non-life insurance coverage—and will increase the minimal capital necessities throughout varied insurance coverage classes.

In December, the Nigerian Senate handed a invoice growing the minimal capital necessities for insurance coverage firms, with non-life insurance coverage companies needing N25 billion, life insurance coverage companies N15 billion, and reinsurance companies N45 billion. The invoice additionally proposes a penalty of N25 million for people discovered working unlicensed insurance coverage companies within the nation.

The brand new Act repeals a number of outdated legal guidelines, together with the Insurance coverage Act, Cap 117; the Marine Insurance coverage Act, Cap M3; the Motor Automobile (Third Party) Insurance coverage Act, Cap M22; the Nationwide Insurance coverage Company of Nigeria Act; and the Nigerian Insurance coverage Reinsurance Company Act, Cap N131, all of which have been a part of the Legal guidelines of the Federation of Nigeria, 2004.

The decision of the Home adopted the consideration of the Senate invoice introduced throughout Wednesday’s plenary by Home Chief, Prof. Julius Ihonvbere. Lawmakers meticulously examined the clause-by-clause provisions of the invoice and concurred with the Senate, signaling the ultimate passage of the invoice to an Act of the Nationwide Meeting.

Main goal

The first goal of the invoice is to manage the insurance coverage trade to develop the sector and defend the pursuits of policyholders, potential policyholders, and different stakeholders below insurance coverage insurance policies in methods which are in keeping with the continued growth of a viable, aggressive, and progressive insurance coverage trade.

The Act will even decide who can perform insurance coverage enterprise in Nigeria, requiring insurance coverage operators, administrators, and administration to fulfill particular suitability necessities.

In line with Half III of the proposed legislation, “An individual shall not start or perform insurance coverage, reinsurance, or associated enterprise in Nigeria except licensed by the fee as an insurer or a reinsurer below this invoice.” 

It additional offers that an utility for licensing should be made to the fee within the prescribed kind and accompanied by the mandatory paperwork or data as required by the fee.

The invoice additionally addresses the cancellation of working licenses, stating that the fee can cancel a license if an insurer or reinsurer is just not conducting enterprise in accordance with sound insurance coverage rules, has failed to fulfill the capital or solvency necessities, or has ceased to hold on the enterprise of insurance coverage for no less than one 12 months in Nigeria.

What you must know

• In Part 15, Half IV, the invoice stipulates minimal capital necessities: N15 billion or risk-based capital for non-life insurance coverage enterprise, N10 billion or risk-based capital for all times assurance enterprise, and N35 billion or risk-based capital for reinsurance enterprise.
• The fee will think about varied dangers, together with insurance coverage threat, market threat, credit score threat, and operational threat, in figuring out the risk-based capital required.
• Part 16 of the proposed laws requires insurers aspiring to start enterprise in Nigeria after the enactment of this invoice to deposit 50% of the minimal capital requirement with the Central Bank of Nigeria.

Upon registration, 80% of the statutory deposit might be returned with curiosity inside 60 days. Present firms are required to deposit 10% of the minimal capital with the Central Bank of Nigeria.