Stories by Sola Alabadan, Senior Correspondent

Commissioner for Insurance, Fola Daniel, says that the National Insurance Commission (NAICOM) will not hesitate to prosecute owners of failed insurance companies.

Speaking during a live television programme on LTV in Lagos, the NAICOM boss stated that the commission would always want to ensure that the insuring public and shareholders of companies are adequately protected.

The Failed Banks (Recovery of Debts & other Financial Malpractice) Tribunal which was in force between 1994 and 1999 has now been scrapped as a result of the amendment to the Bank and Other Financial Institutions Act (BOFIA) 1991.

Responding to questions on why NAICOM should unnecessarily be delaying the return of NICON Insurance Plc to its rightful owner, Jimoh Ibrahim, he said the people were just being sentimental.

Daniel pointed out that as NAICOM is empowered to take over the management of any insurance outfit whenever it finds out that there are infractions, with a view to put the company back on track and returns it to the owner, noting that the commission would not want to stay in a company a day longer than necessary.

Section 82 (1) of the Insurance Act states that "In every case where the certification of registration of an insurer, insurance broker or loss adjuster is cancelled under this Act, the Commission may, unless the insurer, broker or loss adjuster is a body corporate being wound up by the court, appoint a receiver to immediately take charge of its assets and to collect and gather in all other assets due to the insurer, broker or loss adjuster and administer same as expeditiously as possible for the benefit of the policy-holders, clients and creditors thereof or appoint a receiver to act on its behalf.

The commission or the appointed receiver after his appointment may apply to the court to wind up the business of the insurer, broker or loss adjuster and, for this purpose, the provisions of the companies and Allied Matters Act, 1990 relating to winding up of companies by the court shall, subject to section 91 of this Act apply.

The receiver may, immediately after his appointment freeze the accounts of the insurer, broker or loss adjuster and shall take charge of its management and control.

It was, however, pointed out in Section 83 (1) that "This section has effect in relation to the winding-up of an insurer, carrying on life insurance business."

The commission or receiver or liquidator appointed for the winding-up shall, unless the court otherwise orders, carry on the life insurance business of the insurer with a view to its being transferred as a going concern to another reinsurers, whether an existing insurer or an insurer registered for that purpose.

The liquidator may agree to the variation of any contract of insurance in existence when the winding-up order is made but shall not affect new contracts insurance.

The court may, if it thinks fit and subject to such conditions (if any) as it may determine, reduce the amount of the contracts made by the insurer in the course of carrying on life insurance business.

The commission or the court may at any time on the application of the liquidator, appoint an independent actuary to investigate the life insurance business of the insurer.

The actuary shall report to the authority by whom he was appointed under subsection (5) of this section, as the case may require, on the desirability or otherwise of the life insurance business being continued and on any reduction in the contracts made in the course of carrying on that business that may be necessary for its successful continuation.