INSURANCE 1.10 NAICOM
To ensure that the insurers are able to meet their promises-John Birds also because of the aelatory nature of insurance… it is based on trust.
The Insurance Act 1976: Raised the minimum paid up capital from N100,000 to N 800,000.
The Insurance (Special Provisions) Act 1988: made the provisions on Agent, non-disclosure and so on more detailed. Though did not repeal the insurance Act 1976.
The insurance Act 1991: repealed the insurance Act 1976 with a view to review and consolidate the various legislations into one volume. Many of the provisions were maintained. The minimum paid up capital was increased from N800,000 to 5 million. It provided that no person can hold more than 25 percent of the share of an insurance company.
The insurance Decree 1997: re-enacted most of its predecessor’s provisions. Was more detailed in relation to the control and regulation of insurance intermediaries and loss adjusters. Introduced the office of the director of insurance. In this year, the NAICOM Act was enacted.
Insurance Act 2003: increased minimum paid up share capital. Section 9 provides 150 million for life insurance, 200mil for business, 350 million for composite business and reinsurance. In 2005, in furtherance of its empowerment, NAICOM reviewed it 2 billion for life insurance, 5 billion for composite insurance, 10 billion for reinsurance business. To this effect, various mergers and liquidation occurred during that period.
The National Council of Insurance Brokers was created. There has been various disputes between them and NAICOM- Naicom V NCIB.
In 2013, guidelines for the regulation of insurance policies and for the regulation of Islamic insurance were issued. Micro-Insurance to target low income earners.
Statutory deposit: 50 percent of the paid up share capital deposited with the CBN. 80 percent shall be returned within 60 days from the insurer’s date of registration. Companies existing on the commencement of the Act were to deposit 10 percent of the minimum paid up share capital. Any withdrawal from the deposit must be returned within 30 days.
Section 12-13 provides for personnel that can be appointed in the top cadres. The Chief Executive, director, manager, secretary must be fit and proper persons. They must not have been managers or directors of a failed financial institution. Not being persons convicted for acts involving fraud or dishonesty.
Contingency fund (one percent of gross premiums or 10 percent of the profits whichever is higher and foreign reserves shall be maintained by the Insurer-Section 22. Their balance sheet profit and loss account should be audited by an external auditor.
Winding Up: Petition can be brought by not less than 50 policy holders or by the commission. The provisions of the CAMA shall apply subject to the Insurance Act.
Administration and Enforcement: vested in the National Insurance Commission by Section 86 of the Act. No wilful obstruction of its officials else 500,mil to be paid.
Section 78 establishes the security and development fund under the NAICOM to be used for the settlement of claims against insolvent insurers and compensation for innocent individuals (third party) of uninsured or unidentified drivers.
NAICOM has been extablished under the NAICOM Act to regulate, control, administer and supervise the insurance industry. They have made various guidelines.