With stricter capital rules on the horizon, Nigeria’s insurance regulator is taking early steps to evaluate insurers’ balance sheets and reinforce the industry’s sustainability.
The National Insurance Commission (NAICOM), which regulates insurance business in the west African country, has started the process of assessing the capital strength of insurance firms ahead of the roll-out of new rules that provide for enhanced capital positions.
NAICOM) says 20 operators in the market have already invited it to verify their capital base in line with the on-going industry recapitalisation exercise set to elapse by July 31, 2026.
NAICOM chief executive Segun Omosehin said during a recent industry update on the recapitalisation exercise, the verification for the sector has already commenced with the help of four audit and advisory firms— PricewaterhouseCoopers, KPMG, Deloitte and Ernst & Young. The four are expected to guarantee transparency in the capital verification exercise.
“We receive capital verification notices from companies every month. By the end of March, we shall invite those we’ve not heard from to know where they stand on the recapitalisation exercise. We are committed to the reforms in the insurance sector,” said Omosehin.
“July 31, 2026 is sacrosanct for the recapitalisation exercise. We shall keep the insuring public abreast of the recapitalisation process. We promise to lead the sector with clarity, transparency and willingness to succeed.”
Higher minimum capital requirements
Following the enactment of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 on July 31, 2025, 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 higher minimum capital requirements of ₦10 billion (US$7.2 million) for life, ₦15 billion (US$10.8 million) for non-life, ₦25 billion (US$18.1 million) for composite and ₦35 billion (US$25.3 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)
Omosehin emphasised that the transformation policy in the insurance sector is in tandem with the $1 trillion economy policy of the Federal Government.
He said the 2026 agenda of the Commission is disciplined execution driven by three major factors: financial soundness, policyholders protection and ensuring fairness in regulation.
Omosehin added that the Commission has created the Policyholders Insurance Protection Fund with the first quarter of 2026 as the take-off period. He explained that the Fund will take care of policyholders in terms of valid claims in the event of any insurer that experiences insolvency.
Collaboration
In the recent past, various institutions and stakeholders ranging from agriculture, small businesses (SMEs), aviation and Takaful have reached out to NAICOM seeking business linkages to expand the insurance uptake in the country.
When NAICOM hosted the Takaful Advisory Council (TAC), the focus was on how Takaful insurance business development can tap into the Muslim population in Nigeria.
Abdulrazzaq Abdulmajeed Alaro, chairman of TAC sought the support of the industry regulator to create more national awareness for Takaful insurance to boost uptake.
To integrate insurance data and strengthen risk management in Nigeria, CRC Credit Bureau visited NAICOM to seek partnership to drive national credit reporting and digital adoption to reduce industry fraud, enhance underwriting and claims management.
Omosehin said such collaboration will empower insurers to ride on CRC’s data and analytics for regulatory oversight, fraud detection and industry capacity building. Integrating insurance data can boost the sector in several ways:
- More accurate underwriting and risk-based pricing
- Speedier, more accurate claims processing and fraud prevention
- Detecting and monitoring fraudulent activities, including multiple claims
- Enhanced customer verification leveraging CRC’s datasets
- Support for digital insurance products and financial inclusion through automated decisioning.
The director-general, Bureau of Public Procurement (BPP), Adebowale Adedokun emphasised the need for deeper collaboration between NAICOM and BPP to promote inter-agency partnership in terms of insurance requirements in public procurement processes under the NIIRA regime.
The Organised Private Sector of Nigeria (OPSN) engaged NAICOM on the implementation of the new law and sectoral insurance products. OPSN requested for deployment of sector specific insurance products for the maritime and petroleum sectors.
Place for insurtechs
Alban Igwe, chairman of OPSN Insurance-Tech Committee, stated that the engagement follows months of stakeholder consultations across the maritime and petroleum sectors, including freight forwarders, transport associations, retailers and underwriters.
He said their aim is on provisions of the law and operationalisation of insurance products to address longstanding gaps in compensation and risk transfer in these sectors.
The OPSN described two priority tracks:
- Maritime sector product(s) to mitigate container and cargo-related losses and to provide faster compensation for affected parties.
- Petroleum sector product(s) to provide public liability/commission liability cover for retail distribution and transit risks (noting tight retail margins and the need to consider pricing templates)