Insurance Reform Gains Momentum as NAICOM Begins Recapitalisation Verification for 20 Firms
Nigeria’s insurance sector is entering a decisive phase of regulatory reform as the National Insurance Commission (NAICOM) confirms that 20 insurance companies have formally applied for verification under the industry’s recapitalisation programme.
The NAICOM recapitalisation exercise forms part of sweeping reforms introduced under the Nigeria Insurance Industry Reform Act (NIIRA) 2025, a regulatory overhaul aimed at strengthening the financial resilience of insurers, improving consumer protection and repositioning the sector as a stronger pillar of Nigeria’s financial system.
According to Olusegun Omosehin, the recapitalisation verification process has already commenced, with the July 31 compliance deadline remaining firmly in place.
Recapitalisation Drive Enters Verification Phase
Speaking during a media briefing in Lagos, the NAICOM Commissioner disclosed that the participating insurers have submitted formal readiness letters and paid the required verification and processing fees.
To ensure credibility and transparency, NAICOM has appointed four global audit firms to oversee the verification process:
- PwC
- KPMG
- Deloitte
- Ernst & Young
The audit firms were approved through Nigeria’s public procurement framework to independently verify the financial positions of insurance companies undergoing recapitalisation.
“The recapitalisation process is on track. Twenty companies have confirmed readiness and paid verification fees,” said Olusegun Omosehin, Commissioner for Insurance and CEO of NAICOM.
Higher Capital Thresholds Reshape the Industry
Under the reform framework, insurers must meet significantly higher minimum capital thresholds designed to strengthen balance sheets and reduce systemic risk.
The revised capital requirements include:
| Insurance Category | Previous Capital | New Capital Requirement |
| Life Insurance Companies | ₦2 billion | ₦10 billion |
| Non-Life Insurance Companies | ₦3 billion | ₦15 billion |
| Reinsurance Companies | ₦10 billion | ₦35 billion |
These increases represent one of the most substantial regulatory resets in Nigeria’s insurance history.
However, regulators emphasise that the reform goes beyond capital injections.
Shift Toward Risk-Based Capital Regulation
The second phase of the reform programme will introduce a risk-based capital framework, aligning insurers’ capital positions with the scale and nature of the risks they underwrite.
Under this model, companies with larger or more complex risk portfolios must maintain higher capital buffers to protect policyholders and the financial system.
NAICOM also indicated that insurers unable to meet the requirements may be summoned for regulatory consultations involving both executive and non-executive directors.
The objective, according to the regulator, is to ensure a smooth transition without compromising policyholder protection.
Policyholder Protection Fund Under Development
A central pillar of the reform framework is the creation of an Insurance Policyholders Protection Fund, also mandated by the NIIRA 2025.
The fund is designed to provide financial protection to policyholders if an insurance company becomes insolvent.
Under the proposed structure:
- Valid claims will be settled first from the protection fund
- Recovery efforts will then be pursued against the failed insurer’s assets
- Shareholders will only be paid after policyholder claims are settled
Draft operational guidelines have already been circulated to industry stakeholders, with the fund expected to become operational soon.
Stakeholders Call for Deeper Sector Transformation
The NAICOM recapitalisation exercise is occurring alongside broader calls for coordinated reforms to unlock Nigeria’s underdeveloped insurance market.
At the Insurance Sector Transformation Consultative Forum, organised by EnterpriseNGR, policymakers and industry leaders emphasised the need to rebuild trust and improve insurance penetration.
Currently, insurance penetration in Nigeria remains below one per cent of GDP, far lower than levels seen in many emerging economies.
Aigboje Aig-Imoukhuede stressed that increasing penetration to around three per cent would significantly expand the industry’s contribution to economic development.
“Insurance is one of the most important services globally, and we must raise its relevance in our economy,” he said.
Industry stakeholders also highlighted the need for stronger consumer awareness, improved claims management transparency and increased adoption of digital technologies.
The Strategic Importance of Insurance to Economic Growth
Globally, a strong insurance sector plays a critical role in mobilising long-term capital and protecting economic activity.
Insurance pools risk across the economy, enabling businesses and households to invest confidently in sectors such as:
- infrastructure development
- agriculture
- healthcare
- energy projects
- technology ventures
A stronger insurance ecosystem also supports financial system stability by providing risk mitigation tools for businesses and investors.
BRANDECONOMY Insight
Nigeria’s Insurance Recapitalisation Is a Structural Reset
The recapitalisation programme represents more than a compliance exercise—it signals a structural reset of Nigeria’s insurance industry.
Three major objectives are driving the reforms:
- Strengthening Financial Resilience
Higher capital thresholds aim to ensure insurers can withstand economic shocks and large claims. - Protecting Policyholders
The proposed Policyholders Protection Fund introduces a safety net that improves consumer confidence. - Unlocking Long-Term Investment Capital
A stronger insurance sector can mobilise funds for infrastructure, pension-backed investments and economic development.
If successfully implemented, the NIIRA reforms could mark the beginning of a new era for Nigeria’s insurance industry—one in which stronger balance sheets, modern risk frameworks and improved governance reposition insurance as a key driver of economic growth.
