SENATE'S PROPOSAL FOR FINES ON UNLICENSED INSURANCE FIRMS
1. Proposed Legislation:
- Bill Overview: The Nigerian Senate has proposed a bill titled "Nigeria Insurance Industry Reform Bill, 2024," sponsored by Senator Tokunbo Abiru and 40 other senators. The bill aims to reform the insurance sector by repealing several outdated laws, including the Insurance Act, the Marine Insurance Act, and the Nigeria Reinsurance Corporation Act.
2. Penalties for Unlicensed Insurance Activities:
- Individuals: A fine of N25 million or imprisonment for up to two years, or both, for individuals operating unlicensed insurance businesses.
- Companies: Principal officers of companies operating without a valid license will face a fine of N50 million or a two-year prison term, or both.
3. Capital Requirements:
- Non-Life Insurance: Minimum capital of N25 billion or a risk-based capital as determined by the commission.
- Life Assurance: Minimum capital of N15 billion.
- Reinsurance: Minimum capital of N45 billion.
4. Deposit Requirements:
- New Insurers: Must deposit 50% of the required minimum capital with the Central Bank of Nigeria (CBN). 80% of this deposit will be returned with interest within 60 days after registration.
- Existing Companies: Required to deposit 10% of the minimum capital with the CBN, with interest applied annually at the minimum lending rate.
5. Consumer Protection:
- Policy Documents: Must be delivered within five working days after premium payment or within 30 working days for special/industrial risk insurance. Failure to comply results in a fine up to 5% of the premium received.
- Claim Denial: Insurers cannot deny claims based on undelivered policy documents, except in specific circumstances.
6. Approval for New Products:
- Regulation: New insurance products must be approved by the commission. If the commission does not respond within 30 days, the product is deemed approved.
- Penalties: Daily fines of N5 million for insurers introducing new products without approval.
7. Objective of the Bill:
- Financial Resilience: The bill aims to ensure that insurers have sufficient financial stability to meet obligations and protect consumers.
1. Proposed Legislation:
- Bill Overview: The Nigerian Senate has proposed a bill titled "Nigeria Insurance Industry Reform Bill, 2024," sponsored by Senator Tokunbo Abiru and 40 other senators. The bill aims to reform the insurance sector by repealing several outdated laws, including the Insurance Act, the Marine Insurance Act, and the Nigeria Reinsurance Corporation Act.
2. Penalties for Unlicensed Insurance Activities:
- Individuals: A fine of N25 million or imprisonment for up to two years, or both, for individuals operating unlicensed insurance businesses.
- Companies: Principal officers of companies operating without a valid license will face a fine of N50 million or a two-year prison term, or both.
3. Capital Requirements:
- Non-Life Insurance: Minimum capital of N25 billion or a risk-based capital as determined by the commission.
- Life Assurance: Minimum capital of N15 billion.
- Reinsurance: Minimum capital of N45 billion.
4. Deposit Requirements:
- New Insurers: Must deposit 50% of the required minimum capital with the Central Bank of Nigeria (CBN). 80% of this deposit will be returned with interest within 60 days after registration.
- Existing Companies: Required to deposit 10% of the minimum capital with the CBN, with interest applied annually at the minimum lending rate.
5. Consumer Protection:
- Policy Documents: Must be delivered within five working days after premium payment or within 30 working days for special/industrial risk insurance. Failure to comply results in a fine up to 5% of the premium received.
- Claim Denial: Insurers cannot deny claims based on undelivered policy documents, except in specific circumstances.
6. Approval for New Products:
- Regulation: New insurance products must be approved by the commission. If the commission does not respond within 30 days, the product is deemed approved.
- Penalties: Daily fines of N5 million for insurers introducing new products without approval.
7. Objective of the Bill:
- Financial Resilience: The bill aims to ensure that insurers have sufficient financial stability to meet obligations and protect consumers.