The Insurance Reforms Bill that has just passed the second reading at the Senate has proposed that companies transacting insurance businesses without obtaining operational licences will be liable to a fine of ₦50 million or imprisonment for a term of two years.

The bill also specifies that a person who transacts any insurance business without being licensed for that purpose commits an offence and is liable on conviction to a fine of ₦25 million or imprisonment for a term of two years.

These are contained in section 10 of the bill under the subhead – operating an unlicensed insurance business. According to industry observers, if the bill sails through and becomes an act, the sanction would help curb the menace of fake insurance policies that have, over the years, continued to deprive the industry of huge premiums.

They also observed that the industry loses billions of naira to policy counterfeiters.The bill also proposed a minimum capital base of N25 billion for non-life underwriting, N15 billion for life operators and N45 billion for reinsurance to be able to take part in big tickets.

The bill specifies that risk-based capital would be determined from time to time by the National Insurance Commission (NAICOM). It noted that in determining the risk-based capital required, the commission shall take into consideration the capital for insurance risk, market risk, credit risk, operational risk, and apply such capital charges on assets and liabilities as shall be determined from time to time.