Regulators are corporate undertakers. When the numbers no longer look positive and favourable on the books of operators under their jurisdiction over a given period of time, they strike to remedy the situation in the interest of the public.
A little more than a week ago, the National Insurance Commission (Naicom), which regulates the insurance industry in Nigeria, effectively revoked the operating licences of Niger Insurance Plc and Standard Alliance insurance Plc, and appointed receivers/liquidators to oversee the final dismantling of the underwriters.
The move came just days before a local court ruled that Naicom has no authority to increase the statutory minimum solvency capital of insurance companies.
The official statement from Naicom on the revocation read as follows:
NOTICE OF CANCELLATION OF THE CERTIFICATES OF REGISTRATION OF NIGER INSURANCE PLC AND STANDARD ALLIANCE INSURANCE PLC
This is to notify all insurance stakeholders and members of the public that the National Insurance Commission, Naicom, has CANCELLED the certificates of registration of Standard Alliance Insurance Plc, RIC – 091 and Niger Insurance Plc, RIC – 029 with effect from the 21st day of June, 2022.
Consequently, the Commission has appointed Sanya, Ogunkuade Esq of Plot 217, Upper Grace Plaza, 3rd Floor (Left Wing), Shetima Munguno Crescent, Behind Julius Berger Equipment Yard, Utako, Abuja as the Receiver/Liquidator for Niger Insurance Plc and, Kehinde Aina Esq of Aina Blankson LP, 5/7, Ademola Street, SW Ikoyi, Lagos as the Receiver/Liquidator for Standard Alliance Insurance Plc.
All stakeholders are advised to forward their enquiries to the respective Receiver/Liquidator for each company for their necessary action.
The Commission assures all stakeholders of the safety and protection of their interests.
‘Rasaaq’ Salami
Head, Corporate Communications and Market Development
For: Commissioner For Insurance, Naicom.
It would be recalled that on 23 June 2021, the Nigerian Insurers Association (NIA), the umbrella body of insurance firms in Nigeria, published a public notice in one of the national newspapers in the country announcing the immediate expulsion of three of its member companies, namely:
- Industrial and General Insurance Limited (IGI)
- Niger Insurance Plc
- Standard Alliance Insurance Plc
In the said publication, the governing council of NIA accused the expelled underwriters of failing to meet their statutory obligations to policyholders in terms of paying accrued claims as at when due.
For policyholders in Nigeria, the recent Naicom action on Niger Insurance Plc and Standard Alliance Insurance Plc could signal the return of liquidation to the country’s insurance sector, bearing in mind a similar exercise that took away the likes of Investment & Allied Insurance Company Pls and Springlife Insurance Company Limited few years ago.
Whatever becomes the final outcome of the current revocation exercise, the reality remains that certain level of public confidence and faith has left the insurance industry in Nigeria.
Meanwhile, a Federal High Court has ruled that Naicom has no authority to increase the statutory minimum solvency capital of insurance companies.
Trial judge, Justice Chukwujeku Aneke, said the change could only be made by the National Assembly amending the Insurance Act and Regulation 2003, according to local media reports.
The court also directed Naicom to reverse its decision on the increase in the statutory minimum solvency capital for insurance companies.
In 2018, Naicom had announced that insurers were to comply with higher minimum solvency capital requirements with effect from 1 January 2019. Naicom said then that the new regulation was to take effect immediately (20 May 2019) for new applications while existing operators have until 30 June 2020 to comply. However, on 3 June 2020, Naicom mandated underwriters to meet the new capital requirements in two stages: the deadline for the first phase of recapitalisation 31 December 2020 and that for the second phase was 30 September 2021.
Naicom was forced to suspend the recapitalisation exercise after the first phase because of legal action brought against it, challenging its decision to raise the minimum capital. In the ruling by the court, Justice Aneke said Naicom’s actions were against the 1999 Constitution and the Insurance Act.
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