Nigeria’s insurance sector faces sweeping consolidation as the July 2026 recapitalisation deadline nears, with firms unable to raise fresh capital at risk of forced mergers, acquisitions, or liquidation.
Following the enactment of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 on 31 July 2025, the National Insurance Commission (NAICOM) rolled out a 12-month recapitalisation exercise for insurance and reinsurance companies operating in the country under a Risk-Based Capital (RBC) model.
The NIIRA 2025 legislation introduced a higher Minimum Capital Requirements (MCR) of ₦10 billion (US$6.7 million) for life, ₦15 billion (US$9.98 million) for non-life, ₦25 billion (US$16.6 million) for composite and ₦35 billion (US$23.3 million) for reinsurance companies in Nigeria with a deadline of July 2026.
When compared with the previous capital requirements, this is how the increase looks:
- Life insurers: raised from ₦2 billion to ₦10 billion (5× increase)
- Non-life insurers: raised from ₦3 billion to ₦15 billion (5× increase)
- Composite insurers: raised from ₦5 billion to ₦25 billion (5× increase)
- Reinsurers: raised from ₦10 billion to ₦35 billion (3.5× increase)
In terms of readiness, NAICOM has already established a recapitalisation committee to oversee the process to ensure seamless compliance by operators while the Nigerian Insurers Association (NIA) has expressed the support of its member companies to comply fully with the new capital-raising initiative.
Temitope Borishade, chairman of Guinea Insurance Plc, said the insurer is ready for the recapitalisation challenge.
“Our 2024 results reflect not only the resilience of our business model but also the collective commitment of our stakeholders and workforce. With shareholders now granting approval to raise capital in line with NIIRA 2025, the company is prepared to implement its carefully crafted recapitalisation plan. This will enhance our ability to compete, scale operations, and seize opportunities to grow bigger and deliver greater value to all stakeholders.”
In his assessment, Chukwuemeka Akwiwu, executive director for technical operations at Continental Reinsurance Plc, said insurance operators must adopt strong governance practices as a core strategy to manage the new capital requirement under the NIIRA Act 2025.
“With recapitalisation, we now have the capacity to underwrite more and take on larger risks. But that comes with the responsibility to ensure we are taking on the right risks, with proper exposure limits and necessary protections in place. Governance and control must guide this process. Capital is fleeting, it comes and goes. But it is always willing to stay where strong governance structures are in place. Governance is the multiplier of capital. It doesn’t just preserve capital; it enhances its impact.”
According to market watchers, the new recapitalisation legislation will inevitably lead to mergers and acquisitions and in some instances, outright liquidation of operators that are unable to meet the new capital base by July 2026.
A leading chief executive in the insurance industry said he expects rapid shrinking of the market going forward.
“Naturally, the industry will shrink in terms of number of operators. I do not see all operating insurance firms meeting the July 2026 deadline to beef up their capital as specified by the regulator. In my head right now, I can count at least five mergers, three acquisitions and about three firms going into liquidation. But the real issue is whether the new capital measure will increase insurance penetration and sustained profitability of operators in the market.”
Another operator warned that 12 months is not adequate for insurers to raise their capital base given the current state of the Nigerian economy.
The operator said: “The euphoria over the NIIRA Act 2025 will soon die down when reality hits the market over the newly prescribed capital requirement. It happened with the Insurance Act of 2003 and it would repeat again in 2025. The reason being that the health of the economy and insurance penetration are key vital elements in the capacity of insurers to raise capital and operate profitably.
At the moment, these two key factors are clearly lacking in Nigeria. The economy is down and penetration has remained low over time. In that respect, I consider the 12 months as grossly inadequate for us to raise such humongous capital in the Nigerian economy of today.”
According to current data, insurance penetration in Nigeria is still very low (1.2%) despite the country’s population of over 200 million.
With the clock ticking towards July 2026, Nigerian insurers have no choice but to increase their capital-raising activities in order to remain in business.
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