Tuesday , September 27 2022
Home / Business / NIC Life Assurance faces substantial losses in premiums over suspension

NIC Life Assurance faces substantial losses in premiums over suspension

The insurer recorded Shs 1.36billion in gross written premiums in 2020, representing a 35.9 percent drop compared to the previous year

| THE INDEPENDENT | NIC Life Assurance, a subsidiary of NIC Holdings could face substantial losses in premiums following the decision by the regulator to suspend its operations.

The Insurance Regulatory Authority of Uganda said in a statement that NIC Life was non-compliant with sections 45 (1) and 86 of the Insurance Act, 2017.

Section 45 (1) of the Act states that the regulator may suspend or revoke the license of an insurer or Health Membership Organisation where it is in the public interest or it is required to protect policyholders, the insurer’s business is not being conducted by sound insurance principles and practices; the relevant minimum capital requirement is low or the insurer has not commenced business within 180 days of obtaining a license.

Other grounds for license suspension or revocation include; insurer making a false statement to the regulator, judgment arising out of any liability obtained in any court, ceasing to qualify as an insurer, repeatedly acting illegally, or refusing to abide by the authority’s decision to settle claim or complaint by the act.

Meanwhile, section 86 stipulates the processing and granting of licenses including factors to consider such as capital requirements, competency and integrity of proposed management, governance framework, proposed re-insurance, and among others.

Without a clear mention of the areas of NIC Life’s violation, however, IRA leaves interested parties such as shareholders and customers in a dilemma, creating room for their own interpretation some of which could be disastrous to the industry.

But in trying to ascertain the reasons behind the suspension, Elias Edu, the company secretary of NIC Holdings says the suspension is associated with the delayed appointment of the Managing Director who is also the Principal Officer.

“The Board was aware that due to the need to meet the relevant regulatory requirement, NIC Life had advertised the position in the newspapers in July 2022 and that the process of recruiting a substantive Chief Executive Officer was underway,” he said.

Edu said the company had even written to the regulator last month notifying it of its recruitment plan and awaiting feedback.

“However, while NIC Life was still awaiting the response on the plan, the regulator suspended its license as communicated on 29th August 2022,” he said.

He said the company has since confirmed Oluwatoyin Sanyaolu as the new Managing Director as per Regulation 18 of the Insurance (Licensing and Governance) Regulations, 2020.

NIC Life represents 21% of the total assets of NIC Holdings and contributed 10.3% of the gross premium written last year. NIC Life is currently at the bottom of the country’s nine life insurers.

The insurer recorded Shs 1.36billion in gross written premiums in 2020, representing a 35.9 percent drop compared to Shs 2.1billion in the previous year.

****

Leave a Reply

Your email address will not be published. Required fields are marked *