Federal High Court in Lagos has held that National Insurance Commission (NAICOM) cannot increase the minimum solvency capital policy for insurance companies without National Assembly amending the Insurance Act and Regulation 2003.
Justice Chukwujeku Aneke made the order on July 14, a copy of which was obtained by The Nation yesterday.
The judge further directed NAICOM to reverse itself on the increase in the statutory minimum solvency capital policy for insurance companies.
He held that the directive on capital base increase offends Section 4 of the 1999 Constitution and Section 9 of the Insurance Act and Regulation 2003.
The court made the orders in a suit, FHC/L/CS/1518/18 between Tope Alabi as plaintiff and National Insurance Commission and federal attorney-general as 1st and 2nd defendant.
The suit followed NAICOM’s announcement in 2018 that it planned to release guidelines for implementation of the minimum solvency capital policy in August, 2018; while implementation was meant to take effect from January 1, 2019.
NAICOM, on August 27, 2018, released a circular, NAICOM/DAPCIR/14/2018, wherein it divided the categories of business for insurance companies as provided for in the Act into tier-based.
The plaintiff averred that it prescribed tier-based minimum solvency capital for insurances on the bases of their respective risk profiles and their risks management systems. The circular reflected an insurance of life Insurance Business to N6 billion; Businesses to N3 billion; and oil and gas Insurance Business to N9 billion.
On September 28, 2018, the plaintiff filed an Originating Summons in which he sought, among others, the determination of whether or not NAICOM can increase the statutory minimum solvency capital policy for insurance firms, “as contained in Section 9 of the Insurance Act and Regulation 2003, by a mere circular without an amendment to the enabling statute by National Assembly.
The plaintiff, a lawyer, represented himself. The first defendant was represented by O. Omole while the 2nd defendant was represented by E. Udoh.
The defendants challenged Alabi’s locus standi to institute this suit. The 2nd defendant also prayed the court to strike out its name from the suit.
Granting the plaintiff’s prayers, Justice Aneke held: “…I am of the view that the 1st Defendant, the National Insurance Commission, acting under the National Insurance Commission Act, have no powers to increase the paid-up share capital of the various categories of insurance companies stated in Section 9(1) of the Insurance Act because such increase will be inconsistent with Section 9 of the Insurance Act.