Author: The Nation

The National Insurance Commission (NAICOM) has ruled out any possibility of extending the recapitalisation deadline for operators in the Nigerian insurance industry.

The insurance regulator is insisting that the timeline is rooted in law and cannot be shifted without a fresh legislative process.

The Deputy Commissioner for Insurance (Technical), Dr. Usman Jankara, who represented the Commissioner for Insurance and Chief Executive of NAICOM, Mr. Olusegun Omosehin, disclosed this during a seminar for journalists on the NIIRA 2025 framework on Tuesday in Abuja.

According to Dr. Jankara, the deadline is a statutory provision and not an administrative target that can be adjusted at will.

He stated that any attempt to alter the date would require going back to the National Assembly, securing an amendment to the Act, and obtaining presidential assent.

He said, “NAICOM does not intend to pursue extension. The deadline date is 30 July 2026.”

He explained that the Commission is confident that serious industry players will meet the statutory capital thresholds within the stipulated timeframe, adding that NAICOM expects a stronger, better-governed, and more financially robust insurance sector after the recapitalisation exercise is concluded.

The minimum capital requirement now stands at N15 billion for non-life insurers, N10 billion for life insurance companies, and N35 billion for reinsurance firms. Dr. Jankara described these figures as the basic operating benchmarks that every insurance entity must meet to operate in the market.

He noted that the new capital regime became necessary because inflation and the sharp depreciation of the naira had weakened the real value of the previous capital thresholds.

Jankara recalled that the capital bases of N2 billion to N5 billion that appeared substantial during the last recapitalisation exercise are now comparatively insignificant in dollar terms. He explained that the new capital programme is aimed at strengthening market stability, phasing out weak and marginal operators, encouraging mergers where necessary, and improving the ability of insurers to meet policyholder obligations. “What we are going to see after this exercise is stronger, better-capitalised and more reliable insurers,” he said.

Providing an update on implementation, Dr. Jankara stated that the recapitalisation programme is already in full motion. An in-house recapitalisation committee has been set up within the Commission, guidelines on the new capital requirements have been issued, and companies are required to submit recapitalisation plans to NAICOM. He added that operators are also expected to provide monthly updates on the progress of these plans.

He explained that the current stage of the exercise is verification of claims by companies that assert they have met the new capital thresholds.

To ensure credibility and transparency, NAICOM has engaged the Big Four global auditing firms — KPMG, Deloitte, EY, and PwC — to serve as external verifiers.

These firms are visiting companies, reviewing assets and investments, and authenticating capital positions, after which NAICOM carries out a secondary validation of their reports.

He stressed that, as of now, no company has been officially confirmed compliant. “Whether you are big or small, every operator must pass through the same compliance scanner,” he said.

Dr. Jankara also spoke extensively on the Insurance Policyholders Protection Fund (IPPF), which he described as a safety net created to protect policyholders in the event of the insolvency of an insurance company.

He said the fund operates in a similar manner to the Nigeria Deposit Insurance Corporation (NDIC) in the banking sector, but with broader coverage, because it can intervene even when a company is still operating but in financial distress — thereby performing a dual function comparable to both NDIC and AMCON.

Jankara explained that any financial support granted to troubled insurers from the fund will be treated as a loan that must be repaid, while claims settled through the fund may be recovered from the liquidation proceeds of failed companies. “The fund is self-funding, has a governance committee, and has a sustainability mechanism,” he said.

On funding, he stated that insurance companies will contribute 0.25 per cent of their gross premium income annually to the fund, and contributions will accumulate over time.

Once the fund reaches 25 per cent of the industry’s gross premium, further contributions will be suspended until growth in industry premium resumes. He added that, where insolvency pressures exceed available funds, NAICOM is empowered to request additional contributions from insurers.

He stressed that the fund belongs to the industry and is not a NAICOM-controlled pool, noting that NAICOM is only a member of the management committee.

According to him, operators have largely accepted the levy because of its stabilising role and its capacity to restore confidence among policyholders.

He said the introduction of the fund is expected to address long-standing public mistrust arising from past instances where failed companies could not meet their obligations, thereby damaging the image of the sector.

“This mechanism will improve trust in insurance participation and give Nigerians greater assurance that their interests will be protected,” he stated.

On claims settlement obligations under NIIRA, Dr. Jankara explained that Section 210 of the Act provides clear penalties for failure or undue delay in the payment of legitimate claims.

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These include fines payable to the regulator and the application of compound interest on delayed claims, calculated monthly at prevailing bank rates, on the outstanding amount due to policyholders.

He said this provision is designed to discourage unnecessary delays and to compel operators to treat claims settlement as a core responsibility.

The NAICOM executive also addressed the new sanctions regime for regulatory infractions, noting that the former Insurance Act prescribed fixed penalties that did not reflect the magnitude or financial gains associated with certain breaches.

The NIIRA framework, he said, introduces a more flexible and proportionate system that allows NAICOM to impose sanctions based on the severity of an infraction.

He explained that the Commission now applies the principle of disgorgement, which ensures that any financial benefit obtained through non-compliance is fully recovered, in addition to the imposition of further penalties to deter recurrence.

Jankara added that penalties affecting members of the public are expressly stated in the law, while those relating to regulated entities are determined in line with risk exposure and the gravity of the offence.

The Deputy Commissioner for Insurance expressed confidence that the recapitalisation drive and the protection mechanisms under NIIRA will collectively produce a stronger insurance sector that is better positioned to meet obligations, expand coverage and rebuild public trust in the Nigerian insurance industry.