Senate passes insurance bill mandating N10bn to N35bn capital thresholds
BY MOTOLANI OSENI
The Nigerian insurance industry faces a recapitalisation exercise in 2025 as the Senate has approved the Consolidated Insurance Bill, introducing new capital requirements.
The bill specifies minimum thresholds of N10 billion for life insurance firms, N15 billion for non-life businesses, and N35 billion for reinsurance companies, representing increases of 400–500 per cent from the existing benchmarks.
Currently, insurers operate with minimum capital bases of N2 billion for life, N3 billion for non-life, and N10 billion for reinsurance businesses, as established in the last recapitalisation in 2007.
The new thresholds aim to address economic changes such as inflation, forex instability, and rising insurance replacement costs.
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The bill, sponsored by Senator Adetokunbo Abiru, adopts a risk-based capital model where capitalisation levels align with an underwriter’s risk profile.
The legislation consolidates various insurance laws, including the Insurance Act 2003 and the Marine Insurance Act, to modernise the regulatory framework and enhance industry competitiveness.
Following Senate approval, the bill will proceed to the House of Representatives for concurrence and then to the President for assent. NAICOM is expected to issue implementation guidelines by mid-2025, setting the deadline for compliance.
Some insurers have already begun preparations to meet the new capital requirements, while others face significant challenges in raising funds. Critics, including Senator Jimoh Ibrahim, argue that the increased thresholds could strain smaller firms, but the Senate overwhelmingly backed the changes to promote stability and growth in the sector.
