Senate has proposed a fine of N50m to the principal officers of insurance

companies operating without valid licenses or that they be sentenced to a

two-year prison term or both.

It proposed this in a bill sponsored by Senator Tokunbo Abiru representing

APC, in Lagos state East and 40 others titled, ‘Nigeria Insurance Industry

Reform Bill, 2024,’ which seeks an Act to repeal the Insurance Act, Cap117

2004, the Marine Insurance Act, Cap M3 Laws of the Federation of Nigeria

2004, the Nigeria Reinsurance Corporation Act, Cap, N131, Laws of the

Federation of Nigeria, said, the bill which passed its second reading in July

also proposed that any individual found engaging in unlicensed insurance

activities will face a fine of N25,000,000 or imprisonment for up to two years,

or both.

He also said, in addition to the punitive measures, the bill outlines stringent

capital requirements that must be met by any entity wishing to operate in

the insurance market, while, non-life insurance businesses must maintain a

minimum capital of N25bn or a risk-based capital as the commission

determines, and the Senate will also set the minimum capital for life

assurance businesses at N15bn, while reinsurance businesses are required

to maintain a capital of N45 billion.

The requirements, according to the sponsor, are designed to ensure that

insurers possess the financial resilience necessary to meet their obligations,

while, the bill also mandates that any insurer intending to commence

operations in Nigeria must deposit 50 per cent of the required minimum

capital with the Central Bank of Nigeria, adding that upon registration, 80 per

cent of this deposit will be returned with interest within 60 days, and existing

companies are required to deposit 10 per cent of the minimum capital with

the CBN, with interest applied annually at the minimum lending rate.

To further protect consumers, the bill specifies that insurance policy

documents must be delivered to the insured within five working days after

the payment of premiums, or within 30 working days for special and

industrial risk insurance, adding that, failure to comply with this provision will

result in a fine of up to five per cent of the premium received, along with

additional penalties as determined by the commission, while, insurers are

also prohibited from denying claims based on policy terms or conditions if it

is proven that the policy document was not delivered before the loss

occurred, except in specific circumstances, adding that, the introduction of

new insurance products will require prior approval from the commission,

which must respond within 30 days of receiving an application.