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NAICOM Vows To Sanction Firms, CEOs, Brokers Using Tier-Based To De-Market Insurers

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BY NKECHI NAECHE—Poised to ensure sanity in the market and end all forms of market infraction in Tier-Based Minimum Solvency Capital (TBMSC) policy, the National Insurance Commission (NAICOM) at the weekend said it will sanction insurance companies, its CEO and brokers that uses the Tier-Based classification as a de- marketing tool against an insurer, within and outside the institution.

The commission disclosed this at the weekend during the 2018 Seminar for Insurance Correspondents in Abuja, stressing that all insurers that are certified to operate in a specified Risk Class by the Commission shall be viewed and treated by insurance institutions and the insuring public as having the same and equal opportunity, rights, obligations and qualifying financial capacity as any other insurer in the same risk class, until an insurer is declared otherwise.

The Director, Supervision, NAICOM, Barineka Thompson, said in any case of violation it will sanction Chief Executive Officers and other relevant Officer(s) of the insurance institution, and/or  Suspension of operational license for a period of six months, and where the violation persists, the withdrawal of the operating license of the insurance institution, as the Commission may determine.

He however urged operators to report all forms of market abuse involving the operation of the Tier-Based policy to the Commission, immediately on the occurrence of a violation by an insurance institution.

The statement thus read: ” Publication of Insurers’ Tier Level: The Commission shall have the sole responsibility to publish the list of insurers and their qualified Tier levels, before the commencement of this policy and from time to time, subsequently. b) All insurers that are certified to operate in a specified Risk Class by the Commission shall be viewed and treated by insurance institutions and the insuring public as having the same and equal opportunity, rights, obligations and qualifying financial capacity as any other insurer in the same risk class, until an insurer is declared otherwise. c) The Tier-Based policy or any inference thereof shall not be used by an insurance institution in any form of public advertisement, commentary, presentation and/or communication whatsoever, without the prior approval of the Commission. d) No Insurance institution shall use the Tier-Based classification as a de- marketing tool against an insurer, within and outside the institution.

“No insurance institution shall qualify or re-categorize an insurer against the certification issued by the Commission in this policy. f) Where a client is having series of businesses that cut across different Tier levels or a combined policy (that is, different risk covers integrated into one policy), the Underwriters/Brokers shall sensitize their client(s) or sectionalize the policy into separate covers for other Risk Tiers. Subsequently, the business shall be allocated to qualified insurers in a lower Tier category. g) Insurers in a Tier shall have the same privilege to participate in the covers attributable to its Tier category notwithstanding the participation of an insurer in a higher Tier of the same client or in a combined policy. h) Where the client chooses not to accept the proposal, only insurers in the higher Tier can underwrite the business.

“All insurance institutions shall have an obligation to report all market abuse involving the operation of the Tier-Based policy to the Commission, immediately on the occurrence of a violation by an insurance institution. j) No insurance institution shall withhold, return or cease the sum of premium arising on or designated for the procurement of cover for a client on account of the operation of this policy where the insurer is certified as possessing the capacity to underwrite the risk in the category of business on which the premium was received or payable k) No discrimination or inferior/superior adjectives shall be allowed by an insurer/broker of an insurer that qualify to underwrite business of a specified class of risk. l) Insurance institutions shall ensure compliance with this Circular as any breach of any part thereof shall attract sanctions as specified in this circular and in addition, in accordance with the relevant provisions of the Insurance Act 2003 and NAICOM ACT 1997.

“Any case of violation shall, in addition to previously stated sanction, attract: Sanctioning of the CEO and other relevant Officer(s) of the insurance institution, and/or  Suspension of operational license for a period of six (6) months, and Where the violation persists, the withdrawal of the operating license of the insurance institution, as the Commission may determine. Reference should at all times, be made to paragraph 9 on conduct of business by insurance institutions in the Circular, when executing any part of the policy.”

 

 

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