The National Assembly of Nigeria has proposed a N25 million punishment for anybody found operating illegal insurance enterprises in the country.
This statement is part of the proposed Nigeria Insurance Industry Reform Bill, 2024, which aims to reform Nigeria’s present insurance regulatory structure, according to Nairametrics.
According to the proposed bill, anyone who operates in the insurance industry without proper authorization will face a fine of N25 million, a two-year prison sentence, or both.
This amount is a hundredfold increase from the N250,000 fine for a comparable infraction under the Nigeria Insurance Act 2003.
For corporations or firms found guilty of the same act, the penalty is doubled, with the organization’s top officers facing fines of N50 million apiece, as well as a possible two-year prison sentence.
The bill document read: “A person who transacts any insurance business without being licensed for that purpose under this Bill commits an offence and is liable on conviction, in the case of —
“(a) an individual, to a fine of N25,000,000.00 or to imprisonment for a term of 2 years or both.
“(b) a company, firm or other combination of persons, each Principal Officer of the company, firm or other combination of persons responsible to a fine of N50,000,000.00 or to imprisonment for a term of 2 years; or to both.”
The bill also requires that any entity requesting for a license be incorporated as a limited liability company under the Companies and Allied Matters Act No. 3 of 2020, or constituted in accordance with any other Nigerian law or enactment. This assures that only legally authorized firms may participate in the insurance industry.
Once licensed, insurers must conduct their business according to sound insurance principles. This includes prudent risk management, financial stability, and adherence to industry best practices. Failure to comply with these principles can result in the revocation of the insurer’s license.
The bill specifies many instances in which the Commission may cancel an insurer’s license. These include insolvency, failure to maintain needed capital, discontinuation of commercial operations, and participation in fraudulent practices. If a license is revoked, the insurer is barred from accepting new business, and the Commission may act as receiver to oversee the company’s operations.
In July 2024, the Senate passed a bill to overhaul Nigeria’s insurance market on a second reading.
The bill sponsored by its Chairman, Committee on Banking, Insurance and Other Financial Institutions, Senator Adetokunbo Abiru (APC Lagos East), seeks an Act to repeal the Insurance Act, Cap117 2004, the Marine Insurance Act, Cap M3 Laws of the Federation of Nigeria 2004, the Nigeria Reinsurance Corporation Act, Cap, N131, Laws of the Federation of Nigeria, etc.
According to Abiru, the bill aims to establish a complete legal and regulatory framework for the Nigerian insurance industry, as well as other related matters.
