THE National Insurance Commission (NAICOM) on Sunday released conduct of business practices and sanctions for insurance companies under the new Tier-Based Minimum Solvency Capital (TBMSC) regime.
A statement signed by the Director Supervision, NAICOM, Mr Barineka Thompson, said the ethical codes would enhance the soundness of insurers.
NAICOM explained that in the new TBMSC capitalisation structure, insurers would automatically fall in any of tier 1 to 3, based on their financial statement position.
“No mandatory capital injection is expected from an insurance firm except the insurer deems it fit.
“Life insurance firms need a minimum solvency level of N6 billion for Tier 1, N3 billion for Tier 2 and N2 billion for Tier 3.
Non-life business requires a minimum of N9 billion for Tier 1, N4.5 billion for Tier 2 and N3 billion for Tier 3.
“While composite companies (combination of life and general business) require a minimum of N15 billion for Tier 1, N7.5 billion for Tier 2 and N5 billion for Tier 3,’’ the commission explained.
The commission also reiterated that the new TBMSC capitalisation structure is not to punish operators but to nourish them.
It maintained that the regulator was poised to ensure that the insurance industry was isolated from the future financial crisis.
“The TBMSC framework has been exposed to insurance companies on July 25; Letter of Advice to each insurer on their “Solvency Assessment Status’’ as at 2017 was issued on Aug. 30 and NAICOM would release and publish categorisation list of insurers in October.
“What is the need if an insurance company underwrites businesses it would not be able to pay their claims when the need arises,” NAICOM said.
The business conducts by NAICOM states that an insurer shall not underwrite insurance policies or undertake risks outside the Tier Level or combination in the case of a composite insurer as authorised by the Commission.
“Any violation shall attract penalty equal to the sum of the advised gross premium involved and in addition, the CEO and other relevant Officer(s) of the insurer shall be penalised as the commission may determine.
“The sanction above will similarly extend to a broker that may be found to be culpable on the advised gross commission involved,’’ NAICOM stressed.
The Commission said it had the sole responsibility to publish the list of insurers and their qualified Tier levels before the commencement of the policy.
It said all insurers certified to operate in a specified risk class shall be viewed and treated by insurance institutions and the insuring public as having equal opportunity, rights, obligations and qualifying financial capacity.
According to the commission, the “Tier-Based” inference shall not be used by an insurance institution for public advertisement, commentary, presentation and communication whatsoever without the prior approval of the Commission.
“No Insurance institution shall use the Tier-Based classification as a de-marketing tool against an insurer, within and outside the institution,” it said.
It further said any violation in addition to previously stated sanctions would attract the sanctioning of the Chief Executive Officer with the suspension of operational license for a period of six months.
“This also extends to other relevant Officer(s) of the insurance institution,’’ NAICOM stated.
The post NAICOM releases business conduct, sanctions in new Tier-Based Regime appeared first on Tribune.Credit: The Tribune