Court Summons NAICOM over Planned Recapitalisation of Insurance, Reinsurance Firms

By Alex Enumah

Justice Ahmed Mohammed of the Abuja Division of the Federal High Court on Thursday, ordered the National Insurance Commission (NAICOM) to appear in court over alleged planned recapitalisation of insurance and reinsurance companies in the country.

Justice Mohammed gave the order in a ruling on an exparte application seeking to stop the commission from going ahead with its proposed increase in the paid-up share capital of insurance and reinsurance firms pending the hearing and determination of the substantive suit.

The suit was instituted by the Incorporated Trustees of Standard Shareholders Association of Nigeria and Mr Godwin Anono while NAICOM is the sole defendant.

The plaintiffs in the suit marked: FHC/ABJ/CS/ 835/2020, complained that despite their appeal in letter to the defendant dated April 16, 2020, about the disastrous economic consequences of the COVID-19 pandemic in Nigeria and globally, the defendant is headstrong on continuing with recapitalisation process as stipulated in the defendant’s circulars.

In arguing the exparte motion, the lawyer to the plaintiffs, Ayodele Akintunde (SAN), informed the court that the commission had, in circulars numbered: NAICOM/DPR/CIR/25/19 of May 20, 2019; NAICOM/DPR/CIR/25-02/2019 of July 23, 2019 and NAICOM/DPR/CIR/25-03/2019 of December 30, 2019, directed all insurance and reinsurance companies in Nigeria to increase their minimum paid-up share capital in the manner stated in the circulars, not later than September 30, 2021, without compliance with the requirements of the law.

“The 2nd plaintiff and other trustees and members of the 1st plaintiff have invested a lot of money in buying shares in insurance and reinsurance companies affected by the defendant’s circulars and they also hold policies of insurance companies,” he said.

The lawyer expressed fear that NAICOM might continue with the implementation of the directive despite the current economic situation foisted on the country and the world by the pandemic.

Akintunde therefore prayed the court to grant his prayer and hear the case as a matter of urgency during the ongoing vacation pursuant to Order 46 Rule 5(1) and (2) of the Federal High Court (Civil Procedure) Rules 2019.

He submitted that if the commission is not stopped, the business of insurance and reinsurance in the country may be badly affected as well as the source of livelihood of the plaintiffs and their family members.

According to him, “Unless this matter is heard by this honourable court as a matter of urgency during the vacation, the 2nd plaintiff and other members and trustees of the 1st plaintiff will suffer irreparable damage, untold hardship and a complete collapse of their investments by the death of many insurance companies and the default by insurers in respect of claims on their various policies.”

Justice Mohammed, after listening to the counsel, ordered NAICOM to appear before the court on August 20, 2020, to show cause why the interim order of injunction being sought by the plaintiffs should not be granted.

He directed that the motion ex-parte; the motion on notice, seeking order of interlocutory injunction; the originating summon; the enroll order and hearing notice should be served on NAICOM.

The judge then adjourned the matter till August 20, for the defendant (NAICOM) to come and show cause why the order should not be granted.