The House of Representatives on Wednesday enacted the Nigeria Insurance Industry Reform Act, 2024, to provide for a comprehensive legal and regulatory framework for insurance business in Nigeria.

The new Act repealed the Insurance Act, Cap 117, Laws of the Federation of Nigeria, 2004; the Marine Insurance Act, Cap M3, Laws of the Federation of Nigeria, 2004; The Motor Vehicle (Third Party) Insurance Act, Cap M22, Laws of the Federation of Nigeria, 2004; the National Insurance Corporation of Nigeria Act, Laws of the Federation of Nigeria, 2004 and the Nigerian Insurance Reinsurance Corporation Act, Cap N131, Laws of the Federation of Nigeria, 2004.

The resolution of the House followed the consideration of the Senate bill as presented during Wednesday’s plenary by House Leader, Prof Julius Ihonvbere.

Lawmakers considered the clause-by-clause provisions of the bill and concurred with the Senate, signalling the final passage of the bill to an Act of the National Assembly.

A copy of the bill obtained by our correspondent showed that the objective of the bill is to among others “Regulate the insurance industry in order to develop the insurance sector and to protect the interest of policyholders, prospective police holders and other stakeholders under insurance policies in ways that are consistent  with the continued development of a viable, competitive  and innovative insurance industry.”

Conditions for licensing

The proposed law provides in Part III that “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 as an insurer shall be made to the commission in the prescribed form and accompanied by such other documents or information as the commission may from time to time require.

“The commission shall publish and make available to the general public a service charter which shall provide  for products  and services of the commission and the complete list of requirements to obtain  the products  and services.”

Cancellation of licence

The bill provides for the cancellation of an operating licence, “Where the commission is satisfied that a licenced insurer or reinsurer “Is not conducting insurance business in accordance with sound insurance principles; has failed to satisfy the capital or solvency requirement as prescribed by the Commission and has ceased to carry on the business of insurance and the primary purpose for which it was registered for at least one year in Nigeria.”

In Section 15, Part IV, the bill provides that “A person shall not carry on insurance business in Nigeria unless the insurer has and maintains, while carrying on that business, a minimum capital, in the case of non-life insurance business, the higher of N15bn or risk-based capital determined by the commission.”

For life assurance business, “The higher of N10bn risk-based capital determined by the commission.

For the reinsurance business, the bill provides for the minimum capital requirement in the higher of N35bn and risk-based capital determined by the commission.

In determining the risk-based capital required, the commission shall take into consideration “The capital for insurance risk, market risk, credit risk and operational risk; and apply such capital charges on assets and liabilities as shall be determined from time to time.”

In Section 16, the proposed legislation provides that “An insurer intending to commence insurance business in Nigeria after the commencement of this bill shall deposit the equivalent of 50 per cent of the minimum capital requirement referred to in section 15 of this bill with the Central Bank of Nigeria.

“Upon registration as an insurer, 80 per cent of the statutory deposit shall be returned with interest not later than 60 days after registration. In the case of existing companies, an equivalent of 10 per cent of the minimum capital stipulated in section 15 shall be deposited with the Central Bank of Nigeria.

“Any statutory deposit made under subsection (1) of this section shall attract interest at the minimum lending rate by the Central Bank on every 1st of January of each year. Notwithstanding the provisions of subsection of this section, the commission may approve the investment of the statutory deposit in treasury bills or other secured investment guaranteed by the Federal Government.”