Recapitalisation must improve claims payment, retirement benefits, regulators tell operators

The National Insurance Commission (NAICOM) and the National Pension Commission (PenCom) have urged insurance companies and pension operators to ensure that recapitalisation translates into stronger institutions, better services and improved financial security for Nigerians.

The regulators made the call at the 11th Annual Conference of the Nigerian Association of Insurance and Pension Editors (NAIPE) on Thursday in Lagos.

The conference has the theme: “Post-Recapitalisation Market Dynamics in Insurance and Pension Sectors”.

Mr Olusegun Omosehin, Commissioner for Insurance and Chief Executive Officer of National Insurance Commission (NAICOM), said insurers must look beyond meeting minimum capital requirements to strengthening their balance sheets, improving risk management and enhancing claims settlement.

He said the successful completion of the recapitalisation exercise marked the beginning of a new phase in the insurance industry, requiring operators to preserve and deploy their capital prudently.

Omosehin said insurers must align their assets with their liabilities to ensure that adequate, liquid and diversified investments were available to meet obligations to policyholders.

He also urged operators to adopt disciplined investment policies, strengthen corporate governance and improve risk management to protect their enhanced capital bases.

The commissioner said increased capital would provide insurers with greater capacity to expand their businesses but warned that growth without adequate risk controls could undermine the gains of recapitalisation.

He said risk-based supervision would be a key regulatory priority, urging operators to strengthen enterprise risk management, actuarial capabilities and stress-testing frameworks as the industry moved towards risk-based capital requirements.

Omosehin said the ultimate test of recapitalisation would be its impact on policyholders, particularly through prompt and efficient settlement of legitimate claims.

He emphasied that improved claims payment was essential to rebuilding public confidence and encouraging greater participation in insurance.

The NAICOM boss also urged insurers to strengthen board oversight, accountability, ethical leadership and regulatory compliance, noting that stronger capital must be supported by effective governance structures.

He identified technology, digital distribution and human capital development as important drivers of growth, urging insurers to invest in digital platforms, professional training and technical expertise.

According to him, actuarial science, investment management, technology and risk management were among the areas requiring stronger professional capabilities to manage larger balance sheets and increasingly complex risks.

Omosehin said recapitalisation should ultimately produce a more resilient, transparent, innovative and customer-focused industry capable of contributing meaningfully to Nigeria’s economic development.

Similarly, Mrs Omolola Oloworaran, Director-General of PenCom, urged pension operators yet to meet the recapitalisation requirements to comply with the directive urgently.

“I’d like to make a warning to the industry. All those who have not met the recapitalisation in the pension industry, there’s no going back. Go and meet your capital requirements with urgency,” she said.

Oloworaran said recapitalisation was necessary to strengthen regulated institutions and improve their capacity to withstand economic and financial shocks.

She said the reforms were particularly important because pension and insurance institutions managed resources critical to the livelihoods and financial security of Nigerians.

According to her, the objective of strengthening the pension industry is to ensure that contributors can retire with peace of mind and dignity.

The PenCom director-general said recapitalisation should not merely produce bigger and more resilient institutions but should also improve service delivery and retirement outcomes.

She said regulators and industry stakeholders must continually assess whether reforms were delivering tangible benefits to Nigerians.

“Beyond recapitalisation, yes, industries are bigger, more resilient and all of that. But at the end of the day, the person, the human we exist to serve, is not feeling the impact. Then what is the importance of all the reforms we put out,” she said.

Oloworaran said PenCom was shifting its focus from merely accumulating pension assets to ensuring that the funds were deliberately and effectively allocated to generate better returns for contributors.

She urged insurance and pension editors to hold regulators and operators accountable by asking critical questions about the effects of policies and reforms on Nigerians.

The PenCom boss commended NAIPE for providing a platform for dialogue among regulators, industry stakeholders and the media, pledging that the commission would continue to use available regulatory tools to strengthen the pension system and build public confidence.

Also speaking, Mr Wale Oshin, Group Managing Director/Chief Executive Officer of Custodian Investment Plc, called for stronger collaboration between insurance companies and pension operators to improve retirement security and protect retirees’ interests.

Oshin said cooperation between the two industries should extend beyond regulators to operators and other stakeholders to ensure better outcomes for retirees and annuity holders.

He said recapitalisation offered an opportunity to strengthen institutions, improve resilience, support investment in technology and enhance operators’ capacity to meet long-term obligations.

However, he stressed that raising capital alone was insufficient, noting that the real value of recapitalisation would be determined by the quality of services and benefits delivered to customers.

Oshin urged insurance companies and pension operators to focus on building sustainable businesses rather than merely meeting regulatory requirements.

He also called for greater attention to annuities and retirement income, warning that inadequate retirement benefits could undermine public confidence in the pension system.

The Custodian Investment chief executive commended regulators and industry stakeholders for efforts to build stronger institutions, urging sustained engagement to address emerging challenges in the insurance and pension sectors.

Earlier in her welcome address, the Chairman of the National Association of Insurance and Pension Editors (NAIPE), Ebere Nwoji, said the recapitalisation of Nigeria’s insurance and pension sectors will strengthen their capacity to support individuals, businesses and the wider economy.

She said the huge capital raised by operators of the two sectors must now be deployed prudently to generate stronger returns for investors and contribute meaningfully to economic growth.

According to her, the recently concluded insurance recapitalisation exercise has placed insurance companies in a stronger position to underwrite bigger risks and provide greater protection to Nigerians and businesses.

She therefore urged Nigerians to take advantage of the increased financial strength of insurance companies by purchasing appropriate insurance policies, stressing that effective risk transfer would provide greater financial security for individuals, businesses and families.

Nwoji also said the ongoing recapitalisation of the pension sector, expected to be concluded by July 2027, offers an opportunity to build a stronger retirement system for Nigerian workers.

She expressed optimism that the exercise, alongside reforms in the sector, would improve the capacity of Pension Fund Administrators (PFAs) to safeguard workers’ retirement savings and generate better returns, ultimately helping Nigerians enjoy greater financial security after their years of service.

She stressed that the enlarged capital base in both sectors must be invested wisely and prudently to deliver sustainable returns.