The National Insurance Commission (NAICOM) has said there is a gap in the provision of the insurance law on cancellation of operating licence, especially as it affects non submission of financial accounts by insurance companies.
The Commissioner for Insurance, Mohammed Kari, who made this known while speaking with reporters in Lagos, said may be the gap wold be filled as the committee reviewing the insurance (consolidated) Bill completes their job.
Among other things, the new law will strengthen the enforcement mechanism by increasing the power of insurance regulator to impose sanctions on defaulting companies, he said.
He stated that only 12 insurance companies have submitted their 2015 account out of the 59 existing firms as at March 18, this year, adding that the Commission was able to approve only seven out of the 12 companies that submitted their accounts.
According to him, the law requires an insurance company to submit its audited account six months after the end of the financial year, which is on June 30, next year.
He said the law went further to provide that any company that fails to submit will be liable to a fine ofN5000 each day of default and that is the much the commission can do.
He noted that the law went further to say that non submission of account is a ground for cancellation of licence but failed to state how long a company can default before the cancellation of licence can occur.
He said: “The law, Insurance Act, 2003 requires an insurance company to submit its audited account six month after the end of the financial year on the 30th of June of next year.
“It went further to provide that any company that fails to submit will be liable to a fine of N5000 on each day of default and that is so much that the commission can do. In respect to those companies that have not submitted their accounts, we compute their penalties and get them to pay.
“Let me also inform you that the law went further to say that non submission of account is a ground for cancellation of licence. I am not a lawyer but I think there is a gap in that provision because the law did not tell us at what point you will deem the company to have failed in the submission of accounts. Maybe the gap will be filled as we are reviewing the insurance law. But for now what we do is to penalise the companies for not submitting their account immediately its after 30th of June,” he noted.