A Federal High Court in Lagos on Thursday, ordered the National Insurance Commission (NIC) to stop the implementation of their proposed minimum solvency capital policy scheduled to take effect from September 14, pending the expiration of a 30-day pre-action notice.
Justice Muslim Hassan gave the order in a class action brought by some shareholders of insurance companies in Nigeria, challenging the new minimum solvency capital policy proposed by the NIC.
At the hearing, counsel to the applicant, Bert Chucks Igwilo (SAN) told the court that they had filed and served the NIC a pre-action notice on September 6.
He further said that the applicants had, before the court an originating summons ex-parte, restraining the NIC from enforcing the proposed policy pending the expiration of the pre-action notice.
Igwilo stated that the originating summons ex-parte was supported by an affidavit sworn by an applicant, who was a shareholder in Aiico Insurance Plc and Cornerstone Insurance Plc, adding that attached to the ex-parte application was the originating summons the applicants intended to file at the expiration of the pre-action notice.
“My Lord, I humbly apply that the defendant be stopped from implementing the policy pending when we file and serve our processes else it would be too late,” he said.
Justice Hassan gave the order and adjourned further hearing to October 8.
The NIC had on August 27, passed a circular with No. NAICOM/DAPCIR/14/2018, dividing the categories of business for insurance companies provided for by the insurance act into tiers.
They had prescribed a tier-based minimum solvency capital for insurers on the basis of their respective risk profiles and their risk management systems.
The applicants who filed the action were: Mr Sunday Nwosu, Mr Adeniyi Adebisi, Mr Moses Oke, CAC Okpara, Mrs Ayodele Kudaisi, Mr Kenneth Nwosu, Mr Issac Obarinde and Mr Okechukwu Nwaguru.
They alleged that the proposed policy, passed in the circular, would affect the business and corporate existence of insurance companies and force them to sell their shares at an undervalue.
In addition, they claimed that the policy was aimed at forcing licensed insurance businesses to increase their paid-up share capitals by 100 per cent or face losing their investments.
They also alleged that the proposed policy in the circular was inconsistent with the provisions of Section 25 of the National Investment Promotion Commission Act, 2003.