****12-month jail term for failure to have third party insurance
Wednesday’s passage of the Insurance Bill by the House of Representatives has set the stage for a new capital base for insurance companies.
The newly passed Bill specifies details of insurance business in the country and how the industry will be regulated.
The House concurred with the Senate, which passed the Bill on December 17, last year.
The clean copy of the Bill will now be sent to President Bola Ahmed Tinubu for assent, following which the new Insurance will take effect.
Reinsurance attracts a capital base of N35 billion.
For those involved in non-life insurance, the bill puts the capital at N15 billion or risk-based capital to be determined by the National Insurance Commission.
For life insurance, the capital base is N10 billion or a risk-based capital to be determined by the commission.
The bill provides a penalty of N250,000 or an imprisonment of 12 months or both for failure to have third-party motor vehicle insurance.
It imposes a fine of N500,000 on anybody acting as an unlicenced insurance agent.
It recognises two classes of insurance in the country – life and non-life.
The bill, when signed into law, will repeal the Insurance Act 2004, the Marine Insurance Act, 2004, the Motor Vehicle (third party insurance) Act 2004, the National Insurance Corporation of Nigeria Act, 2004 and the Nigeria Reinsurance Corporation Act, 2004
The Senate, which passed the bill on December 17, 2024, recommended raising the paid-up share capital for reinsurance companies to N35 billion, up from the previous N10 billion.
The Senate also proposed increasing the minimum capital for life assurance businesses from N2 billion to N10 billion and non-life insurance firms from N3 billion to N15 billion.
According to the bill passed by the House, operating an unlicensed business will attract a fine of N25 million on conviction or two years imprisonment for an individual and N50 million or imprisonment of two years for a company or both.
It also empowers NAICOM to cancel the license of any insurance company that fails to satisfy the capital or solvency requirements as prescribed by the commission or 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.
The proposed law states that anybody intending to start an insurance business in Nigeria after the commencement of the law shall deposit the equivalent of 50 per cent of the minimum capital requirements with the Central Bank of Nigeria.
Failure to deposit the statutory deposit shall constitute a ground for cancellation of the license.
Upon registration as an insurer, 80 per cent of the statutory deposit shall be returned with interest not later than 60 days after registration, while in the case of an existing company, an equivalent of 10 per cent of the minimum capital stipulated in Section 15 shall be deposited with the CBN.
The person risks six months in jail and a fine of N10 million.
The bill provides: “A person shall not construct or cause to be constructed any building of more than one floor without insuring his liability in respect of the construction risks that may be caused by his negligence.
“In relation to a vehicle carrying passengers for hire or reward, every fare-paying passenger in the vehicle shall be insured by the operators of the vehicle against death or bodily harm.”
It provides for a compensation of up to N2 million or such higher sum as the commission may specify in respect of death or permanent disability.
Clause 99 of the bill establishes a Road Accident Victims Compensation Fund into which 0.5 per cent of underwriting profit on motor insurance business shall be paid as well as a committee to oversee the management.
The proposed law also establishes the Insurance Policy Protection Fund into which 0.25 per cent of the gross premium income of every insurer and re-insurer shall be paid.
