A Federal High Court in Lagos on Thursday ordered the National Insurance Commission to stop implementing its proposed minimum solvency capital policy, pending the expiration of a 30-day pre-action notice.
The policy was scheduled to take effect from Friday.
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.
Hassan granted the prayer of the applicants, pending the expiration of a 30 days pre-action notice, and adjourned the case until October 8 for hearing.
Counsel to the applicants, B.C Igwilo SAN, had told the court that they had on Sept. 6 filed and served the NIC a pre-action notice.
He further said that the applicants had before the court, an originating summons ex-parte, seeking to restrain NIC from enforcing the proposed policy, pending the expiration of the pre-action notice.
Igwilo said that the ex-parte motion was supported by an affidavit sworn by an applicant who was a shareholder in AIICO Insurance Plc. and Cornerstone Insurance Plc.
He added that attached to the ex-parte motion was the originating summons which the applicants intended to file at the expiration of the pre-action notice.
He said: “My Lord, I humbly apply that the defendant be stopped from implementing the policy, pending when we file and serve our processes else it will be too late.”
The NIC had on August 27, passed a circular no. NAICOM/DAPCIR/14/2018, dividing the categories of business for insurance companies into tiers provided for by the Insurance Act.
It 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: Sunday Nwosu, Adeniyi Adebisi, Moses Oke, CAC Okpara, Ayodele Kudaisi, Kenneth Nwosu, Issac Obarinde and Okechukwu Nwaguru.
They alleged that the proposed policy would affect the business and corporate existence of insurance companies and force them to sell their shares undervalue.
In addition, they claimed that the policy was aimed at forcing licence 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.