The National Insurance Commission (NAICOM) on Friday cancelled the Tier Based Solvency Capital recapitalisation of the underwriting sector with immediate effect.
The commission gave this notice in a circular to all insurance companies on ‘Withdrawal of circular on Tier Based Solvency Capital policy for insurance companies in Nigeria’, which was signed by the Director, NAICOM, Mr Agboola Pius, on Friday.
It stated, “Pursuant to the powers conferred by the enabling laws, the commission hereby withdraws and cancels the circular dated August 27, 2018 and titled Tier Based Solvency Capital Policy for insurance companies in Nigeria. This withdrawal and cancellation takes immediate effect.”
It will be recalled that some few months back, NAICOM announced a raise in the minimum capital base for life, non-life and composite insurance companies seeking to get licences to underwrite all risks in the country from N2bn, N3bn and N5bn to N6bn, N9bn and N15bn, respectively under its tier-based minimum solvency capital structure.
It later announced an October 1, 2018 deadline, which was not accepted by stakeholders, pushing them to take a legal action against the commission.
Some shareholders of insurance companies had sued the commission to a Federal High Court in Lagos for insisting on implementing the recapitalisation.
Justice Muslim Hassan gave an order in a class action brought by the shareholders restraining NAICOM from enforcing the TBMSC policy.
This led the commission to suspend the implementation of its recapitalisation in October.
In compliance with the extant rules and injunction issued by the Federal High Court, the commission had said status quo would be maintained and insurers were asked to continue to operate on the subsisting regulatory framework prior to the circular.
But through this latest circular, the regulator cancelled the recapitalisation which had generated a lot of controversies.