The Senate, on Tuesday, passed a bill seeking to increase the minimum capital for insurance companies operating in Nigeria from N2 billion to N10 billion, a 400 per cent increase.
The bill also provides an increase in the reinsurance of the insurance companies from N10 billion to N35 billion, while non-life insurance was increased from N3 billion to N15 billion.
It was sponsored by Adetokunbo Abiru (APC, Lagos East), the chairman of the Senate Committee on Banking, Insurance and other Financial Institutions.
The Red chamber passed the bill after considering the committee’s report clause by clause at the Committee of the Whole, chaired by the Deputy Senate President, Barau Jibrin.
It was passed after most lawmakers supported it when Jibrin put it to a voice vote.
Provisions of the Bill
The bill seeks to regulate the insurance business in Nigeria by consolidating various existing legislations such as the Insurance Act, 2003; the Marine Insurance Act; Motor Vehicles (Third Party Insurance) Act; the National Insurance Corporation of Nigeria Act; and the Nigeria Reinsurance Corporation Act.
Section 15 of the bill states that:
(1)A person shall not carry on insurance business in Nigeria unless the insurer has and maintains the minimum capital, in the case of
(a)non-life insurance business, the higher of
(i)₦15,000,000,000.00 or
(ii)risk-based capital determined by the commission
(b)life assurance business, the higher of
(i)₦10,000,000,000.00 or
(ii) risk-based capital determined by the Commission.
( c) reinsurance business, the higher of –
(i)₦35,000,000,000.00 and
(ii) risk-based capital determined by the Commission.
Committee’s Report
While presenting the committee’s report, Abiru said the increments were necessary because of the depreciation in the value of Nigerian currency.
The lawmaker also explained that the increase was because of the Finance Act 2022, which redefined the composition of the capital, international competitiveness and AfCFTA.