Insurance sector embarks on historic N10bn, N15bn recapitalisation push
BY MOTOLANI OSENI
Nigeria’s insurance industry is on the brink of a transformative recapitalisation as companies begin raising their minimum capital to meet new benchmarks set in the recently passed Consolidated Insurance Bill. Life insurers will increase their capital base to N10 billion, while non-life operators are required to meet a N15 billion threshold, marking a significant step toward revitalising the sector.
The bill, passed by the Senate and awaiting concurrence from the House of Representatives before presidential assent, also mandates N35 billion for reinsurance companies. Once enacted, this will be the first major recapitalisation exercise since 2007, addressing challenges brought about by inflation, foreign exchange volatility, and rising operational costs.
Chairman of the Insurance Industry Consultative Council (IICC), Mrs Yetunde Ilori, expressed optimism about the bill’s smooth passage into law early next year.
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Speaking at the 2024 IICC Media Retreat in Ogun State, Ilori emphasised the sector’s united efforts with the National Insurance Commission (NAICOM) to ensure the bill’s implementation.
“We are pushing for this bill because it will revolutionise the insurance industry and deepen penetration across Nigeria,” Ilori, who also serves as the president of the Chartered Insurance Institute of Nigeria (CIIN), stated.
Market observers revealed that some underwriters have already begun recapitalisation ahead of the bill’s finalisation, while others await NAICOM’s announcement of a deadline, expected in the first half of 2025.
The proposed recapitalisation framework introduces a risk-based approach, aligning capital requirements with each insurer’s risk appetite while maintaining minimum thresholds. This represents a departure from previous blanket capital requirements, ensuring a more tailored and sustainable approach to industry growth.
Senator Adetokunbo Abiru, chairman of the Senate Committee on Banking, Insurance, and Other Financial Institutions, underscored the necessity of the capital increment due to the depreciation of the naira and the need for global competitiveness under initiatives like the African Continental Free Trade Area (AfCFTA).
“The current insurance law does not reflect modern realities and fails to address contemporary challenges,” Abiru explained, adding that the reforms will position the industry for global competitiveness and economic growth.
While the bill has received widespread support, concerns were raised by Senator Jimoh Ibrahim, who argued that the higher capital thresholds could stifle smaller players and lead to industry consolidation. However, his proposal to retain the current capital requirement of N2 billion was rejected by the Senate.
The industry is set to transition from the existing capital bases of N2 billion for life insurance, N3 billion for non-life insurance, and N10 billion for reinsurance to the new benchmarks. This 500 per cent increase aims to enhance the sector’s resilience and enable it to contribute significantly to Nigeria’s financial system and economic aspirations.
