The National Insurance Commission has announced the suspension of the implementation of its Tier-based Minimum Solvency Capital policy, otherwise known as the recapitalisation of the industry.
The commission stated this in a circular to all insurance institutions entitled, ‘Update on the implementation of the Tier-based Minimum Solvency Capital policy for insurance companies in Nigeria’, which was released on Thursday.
It said, “In compliance with the extant rules and injunction issued by the Federal High Court regarding the Tier-based Minimum Solvency Capital framework, which was to take effect from October 1, 2018, the commission wishes to clarify that the status quo will be maintained and insurers are to continue to operate on the subsisting regulatory framework prior to the circular.
“Appropriate regulatory directive will be advised upon the completion of the suit.”
Some shareholders of insurance companies had sued the commission to a Federal High Court in Lagos for insisting on implementing the recapitalisation.
Justice Muslim Hassan had on September 13, 2018 gave the order in a class action brought by the shareholders restraining NAICOM from enforcing the TBMSC policy, pending the expiration of the 30-day pre-action notice dated September 4, 2018.
At a sitting on October 8, the judge adjourned hearing in the case to October 22.
On July 25, NAICOM had announced a raise in the minimum capital base for life, non-life and composite insurance companies seeking to get licences to underwrite all risks in the country from N2bn, N3bn and N5bn to N6bn, N9bn and N15bn, respectively under its tier-based minimum solvency capital structure.
It later announced an October 1, 2018 deadline, which was not accepted by stakeholders, pushing them to take a legal action against the commission.