The Independent Shareholders Association of Nigeria (ISAN), has threatened to sue the National Insurance Commission (NAICOM), if it enforces the October 1st recapitalisation for industry operators.
This was contained in a letter addressed to NAICOM, and signed by its solicitor, Chuks Nwachuku, on the “Tier-based minimum solvency capital policy for insurance companies in Nigeria; Pre-action notice,” which was made available to The Guardian.ISAN insisted that the implementation of the policy would lead to unfair loss in the value of shareholders’ investments in insurance companies, and therefore, constitutes a breach of their property rights under the constitution.
It also said the policy is aimed at compelling many insurance companies and their shareholders to sell their interests to a few, contrary to Section 25 of the Nigerian Investment Promotion Act.
The circular further said the hasty implementation of the policy did not give any reasonable room for adjustment or recapitalisation of insurance companies, and therefore capable of causing them to lose their business.On the whole, it stated, the policy is targeted at pushing the majority of insurance companies out of business, adding that this could create undue advantage for a few, contrary to the letter and spirit of the Insurance Act.
The letter read in part, “We therefore give notice that if the Commission does not withdraw the offending circular within 30 days of this letter, we shall institute an action against the Commission in accordance with the instruction of our client.”
The letter said the policy is calculated to bar insurance companies from doing business for which they were dully licensed, through the introduction of a requirement other than the minimum paid up share capital stipulated in the Insurance Act.
It stated: “The policy is designed to have disproportionate effect on the operators, and skew the paying group in favour of the operators. “It is discriminatory and favours new entrants into the industry by giving them time and opportunity to raise capital, while shutting the door against our clients as a result of the unreasonable two weeks given to our client to raise additional capital.”