The National Assembly is proposing a ₦25million fine for insurance companies in Nigeria operating without a license.
This proposal is part of the new Nigeria Insurance Industry Reform Bill, 2024. This bill seeks to change the regulatory laws governing insurance in Nigeria.
According to the provisions of the proposed bill, engaging in insurance business without a license will attract a fine of ₦25million or a jail term of two years. This amount is 100 times more than the N250,000 captured in the Nigeria insurance Act 2003.
The bill was sponsored by the Chairman, Senate Committee on Banking, Insurance and Other Financial Institutions, Senator Adetokunbo Abiru. It seeks to provide a more robust legal framework for insurance business in Nigeria.
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In line with the above, any company found guilty of operating without a license gets a fine of ₦50 million. Also, each principal officer of such organisation will be fined the same amount.
In addition, any individual or group of persons who transacts business with such organisation is liable for the ₦25 million penalty or jail term. Therefore, the bill stipulates that any company applying for an insurance license must be incorporated as a limited liability company under the Companies and Allied Matters Act 2020.
Furthermore, the insurance companies must avoid insolvency, failure to maintain capital, closure of business activities, and taking part in other fraudulent practices. If this happens, the license can be revoked by the regulatory body. With this, the company will be barred from carrying out any other operations within the sector.
It will be recalled that the Senate had last month passed a bill for second reading. The bill sought to repeal and overhaul the insurance laws of the country. The Senate argued that this overhaul is imperative and it would ensure the business is done within the spectrum of the law.
It also seeks to protect consumers against any sharp practices or fraudulent activity of any unlicensed company in the insurance sector.
