The National Insurance Commission (NAICOM) has lauded the House of Representatives’ passage of the Insurance Reform Bill 2024, calling it a landmark achievement for Nigerians.
The House of Representatives passed the Nigeria Insurance Industry Reform Act, 2024, which establishes a comprehensive legal and regulatory framework for the insurance business and protects the interests of policyholders in Nigeria.
This new legislation categorizes insurance into two classes in the country—life and non-life insurance—and raises the minimum capital requirements across various insurance categories.
In a statement, NAICOM described the passage as a significant milestone toward transforming Nigeria’s insurance industry.
NAICOM expressed optimism that the signing of the bill into law would positively impact the industry, leading to improved penetration, increased public confidence, and enhanced competitiveness.
“The commission is enthusiastic about the prospects of the bill receiving assent from Mr. President, which will pave the way for the implementation of its provisions,” NAICOM stated.
“As the apex regulator of the insurance industry, we are committed to ensuring that the sector contributes positively to Nigeria’s financial landscape. We are confident that the Reform Bill will usher in a new era of growth and development for the insurance industry in Nigeria,” the commission added.
Outdated laws repealed
The new Act repeals several outdated laws, including the Insurance Act, Cap 117; the Marine Insurance Act, Cap M3; the Motor Vehicle (Third Party) Insurance Act, Cap M22; the National Insurance Corporation of Nigeria Act; and the Nigerian Insurance Reinsurance Corporation Act, Cap N131, all of which were part of the Laws of the Federation of Nigeria, 2004.
- The resolution of the House followed the consideration of the Senate bill presented during Wednesday’s plenary by House Leader, Prof. Julius Ihonvbere. Lawmakers meticulously examined the clause-by-clause provisions of the bill and concurred with the Senate, signaling the final passage of the bill into an Act of the National Assembly.
- The primary objective of the bill is to regulate the insurance industry, develop the sector, and protect the interests of policyholders, prospective policyholders, and other stakeholders under insurance policies in ways that are consistent with the continued development of a viable, competitive, and innovative insurance industry.
- The Act will also determine who can carry out insurance business in Nigeria, requiring insurance operators, directors, and management to meet specific suitability requirements.
According to Part III of the proposed law, “A person shall not commence or carry out insurance, reinsurance, or related business in Nigeria unless licensed by the commission as an insurer or a reinsurer under this bill.”
It further provides that an application for licensing must be made to the commission in the prescribed form and accompanied by the necessary documents or information as required by the commission.
What you should know
- The bill also addresses the cancellation of operating licenses, stating that the commission can cancel a license if an insurer or reinsurer is not conducting business in accordance with sound insurance principles, has failed to meet the capital or solvency requirements, or has ceased to carry on the business of insurance for at least one year in Nigeria.
- In Section 15, Part IV, the bill stipulates minimum capital requirements: N15 billion or risk-based capital for non-life insurance business, N10 billion or risk-based capital for life assurance business, and N35 billion or risk-based capital for reinsurance business.
- The commission will consider various risks, including insurance risk, market risk, credit risk, and operational risk, in determining the risk-based capital required.
Section 16 of the proposed legislation requires insurers intending to commence business in Nigeria after the enactment of this bill to deposit 50% of the minimum capital requirement with the Central Bank of Nigeria.
Upon registration, 80% of the statutory deposit will be returned with interest within 60 days. Existing companies are required to deposit 10% of the minimum capital with the Central Bank of Nigeria.
