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Chuks Udo Okonta
Any insurance company that has not less than five complaints of failure to pay claims promptly made against it which the National Insurance Commission (NAICOM) has received and verified, risks loosing its operational licence, the Insurance Reform Bill, has proposed.
This is contained on section 8 of the Bill, under the headline, cancellation of licence.
The Bill also proposed other grounds for cancellation of licence, which include; where the Commission is satisfied that a licenced insurer or reinsurer —
is not conducting insurance business in accordance with sound insurance
principles; has failed to satisfy the capital or solvency requirement as prescribed by the Commission; 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; has applied in writing for the cancellation of its licence as an insurer; has a judgment debt in relation to a judgment obtained against it from a Court of competent jurisdiction in Nigeria which remains unsatisfied for 90 days and there is no appeal pending against the judgment; is carrying on simultaneously the insurance business with any other
business which is detrimental to its insurance business.
Other grounds are; subject to Part XIII of the Bill, the insurer has transferred to or amalgamated with the business of any other insurer;
has refused to submit to an examination of its books as provided for in
the Bill; has failed to comply with the provisions of this Bill relating to filing of returns with the Commission; has failed to maintain adequate reinsurance arrangements and treaties in
respect of the category of insurance business which the insurer or reinsurer is authorized to transact; lacks the necessary expertise by virtue of a substantial reduction in the
number of its qualified employees;
has a net asset below the minimum capital and capital injections have not
been made within the time stipulated by the Commission;has not less than five complaints of failure to pay claims promptly made against it which the Commission has received and verified;
has failed to set up the special reserves as prescribed by the Commission; acts in any manner, without the approval of the Commission, in cases where this Bill requires such approval; has been wound-up or dissolved or has gone into liquidation; or has failed to maintain reserves as required under the Bill
The Bill stated that an insurance company failed to meet the statutory requirements, NAICOM shall give notice in writing to the insurer of its intention to cancel the licence of the insurer.
It also said the Commission shall in the notice of its intention to cancel the licence of the insurer give the insurer a 30 days period within which to remedy any of the defects or breaches identified in subsection (1) of this section where the defects or breaches are capable of being remedied, stating that any such notice issued by the commission in subsection (2) shall prevent the insurer from carrying out any licensable activity within the specified period until the breach is
remedied.
It noted that where the defect or breach is not capable of being remedied or where it is not remedied within the time specified by the Commission in the notice given, the Commission shall proceed forthwith to cancel the licence of the insurer.
It said where the licence of an insurer is cancelled —the insurer shall forthwith discontinue to accept any new business; and the Commission may, in all cases, act as a receiver from the date of cancellation in accordance with the provisions of the Bill or may appoint any person to act on its behalf as a receiver of the company.
It submitted that an insurer whose licence has been cancelled by the Commission may within 30 days
after the notice of the Commission’s cancellation of its licence, appeal to the Board in writing setting out the grounds of appeal, and that the Board shall within 90 days of receiving the appeal give its decision on whether to
allow or reject the appeal and may impose such conditions as it may deem fit.
Where an appeal is disallowed, the Commission shall cause a notice to be published in the Gazette or in such other manner to ensure publicity as it may determine, it said.
It said an action to challenge the cancellation of the licence of an insurer on any ground whatsoever shall only be instituted in the Federal High Court and such action shall be heard and determined within a reasonable time from the date of the cancellation to which the action relates, stating that
where an appeal is filed against the decision of the court or the Insurance Tribunal, the appeal shall be heard and disposed of by the appellate court . within maximum period of 90 days from the date the appeal is filed and
an action in respect of the cancellation of the licence of an insurer shall not be maintainable unless such action is filed within a period of 60 days from the date of the cancellation.
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