By Zainab Iwayemi
- Injunctions expose Nigeria insurance industry regulator’s indecisiveness
- Leave NAICOM a toothless bulldog
Nigeria’s insurance industry regulator, the National Insurance Commission (NAICOM), is seen to be gradually becoming a toothless bulldog as a raft of indecisiveness over the years has left it exposed in its quest to raise the capital base of insurers in a recapitalisation exercise.
A court order asking NAICOM to rescind its decision on the enforcement of recapitalisation deadline, in which the first phase elapses by 31st December 2020, has reactions now trailing it.
The court’s ruling is to allow insurance companies garner enough time to recover from the 2020 shock brought about by global pandemic, #EndSARS protest, and the recession which has beclouded the economy.
The recent waive in deadline represents a thousand and one times since the orchestration of the move for recapitalisation in 2018. NAICOM had initially scheduled the recapitalisation deadline for 1st January 2019 and has since then, there have been continuous adjournments in date.
However, a court injunction by Justice C. J. Aneke of the Lagos Division of the Federal High Court, on December 21st, ordered NAICOM to restrain from enforcing deadline on insurance firm’s recapitalisation while delivering ruling in an ex-parte application brought before the court by the Incorporated Trustees of the Pragmatic Shareholders’ Association of Nigeria as contained in a motion marked FHC/L/CS/1797/2020 and filed on December 15, 2020, on behalf of the group by their lawyer, I.C. Ifedora.
The Incorporated Trustees had in their filing requested the court to determine that in view of the global pandemic, the economic recession and the destruction of public and private properties during the #EndSARS protests, citing the impact these factors have on the businesses of insurance companies. The prayer contained order of interim injunction to restrain the defendant, alongside its agents, from taking further steps in the recapitalisation process in the insurance industry until the hearing and determination of its motion is brought on notice before the court.
Reacting to this development, Ekerete Ola Gam-Ikon, a consultant and management-strategy insurance expert said, “I do not disagree with the court because NAICOM had failed to use its powers in many areas especially with regards to claims payments. So, it has been generally seen as weak over time, hence an attempt to now exercise its powers is seen as overbearing and abuse of power.”
Prior to this time, NAICIOM had in a circular raised the capital base for insurance companies across the nation. Life insurance firms are expected to meet a minimum paid-up capital of N8 billion, from the previous N2 billion; general insurance companies are required to raise their minimum paid-up capital to N10 billion from N3 billion; while composite insurance was raised from N5 billion to N18 billion; and reinsurance businesses from N10 billion to N20 billion.
The group of concerned members filed an origination summons asking the court to determine the refusal of NAICOM to rescind the recapitalisation deadlines, saying it is an abuse of power and an unreasonable exercise of regulatory powers pursuant to the Insurance Act and the NAICOM Act in view of the global pandemic, the economic recession and the destruction of public and private property during the #EndSARS protests and the impact these factors have on the businesses of insurance companies.
Similarly, the association wants the court to determine that the carrying out of the deadlines will amount to divestment by NAICOM of their property rights in their investments.
While some stakeholders – majorly insurance companies that are affected – have regarded the decision of the court as one that would help insurance companies to grow as it would allot more time for insurance companies to pick up their piece, some experts have opined that the decision is a result of a weakling on the part of NAICOM to transform the industry over time.
From the foregoing, it is hoped that the coming year would witness advancement in the Nigerian insurance industry to earn a position in the forefront of Africa and globally, but this wouldn’t happen so long as NAICOM and other regulatory bodies continue to be soft on insurers.
Based on this, experts have predicted that in the year 2021, recapitalisation deadline will continue to shift, poor claims payment will overburden the industry, partnership and collaboration will increase especially with regards to microinsurance.