Insurance companies share expectations on proposed capital requirements
L-R: Chairman, Nigerian Insurers Association, Mr Kunle Ahmed and Director-General, Mrs Bola Odukale, during a press briefing in Lagos today, Tuesday
Nike Popoola
The Nigerian Insurers Association (NIA), the umbrella body of licensed insurance companies in Nigeria, has expressed optimism about the anticipated positive impact of the Nigeria Insurance Reform Bill 2024, which proposes an increase in the minimum capital requirements for underwriting companies, among other key reforms.
Speaking at a media briefing in Lagos on Tuesday, the Chairman of the NIA, Mr. Kunle Ahmed, described the Bill as a landmark regulation aimed at overhauling the outdated regulatory framework of the Nigerian insurance industry.
He noted that the current laws guiding insurance operations in Nigeria are obsolete, making the proposed Bill a much-needed development. The Bill, which is currently awaiting presidential assent, includes several provisions designed to enhance policyholder protection and strengthen industry capacity.
Ahmed said, “The proposed significant increase in the minimum capital requirements for insurance companies (non-life: N15 billion, Life: N10 billion, Reinsurance: N35 billion) will enhance the financial capacity of insurers to underwrite larger risks, improve their solvency, and increase public confidence in their ability to meet obligations. It also aims to improve the industry’s retention capacity and reduce reliance on foreign reinsurance.”
According to him, the bill emphasizes a shift towards risk-based supervision, which is a more sophisticated and effective approach to regulation, and will allow the National Insurance Commission (NAICOM) to better monitor and manage risks within the industry, ensuring stability and protecting policyholders’ interests.
He said, “One key objective of the bill is to strengthen the protection of policyholders. This is vital for building trust in the insurance sector and encouraging greater participation from the public. Specific provisions for consumer protection will be crucial in achieving this.”
The bill, he explained, introduced stricter licensing requirements for insurance operators, directors, and management, ensuring that only fit and proper persons are allowed to operate in the industry, which will help in maintaining professionalism and ethical standards.
He said, “A stronger and more capitalized insurance industry, operating under a modern regulatory framework (the NAICOM Act is also currently being reviewed), has a greater potential to contribute significantly to Nigeria’s GDP and overall economic development.
“As of today, the Nigerian Insurance Industry Reform Bill 2024 has made significant progress. Both the Senate and the House of Representatives have passed the bill. The House of Representatives concurred with the Senate’s version in March 2025, signaling the final passage by the National Assembly.
“The bill is now awaiting presidential assent to become law. NAICOM and industry stakeholders have expressed optimism that the President will sign the bill into law, and once enacted, the Nigerian Insurance Industry Reform Act 2024 is expected to have profound implications for the industry:
Insurance companies will be required to meet the new minimum capital requirements within a specified timeframe. This will likely lead to capital raising, mergers and acquisitions.”
With stronger capital bases, he noted, insurers will have the capacity to underwrite larger and more complex risks, potentially reducing the need for significant foreign reinsurance.
The NIA chairman said, “The higher capital requirements will enhance the solvency and financial stability of the insurance industry, making it more resilient to economic shocks and large claims.
“More importantly, a more robust and well-regulated industry is likely to inspire greater public trust and encourage more Nigerians to take up insurance policies, leading to increased penetration.
“Furthermore, the emphasis on risk-based supervision and a streamlined regulatory framework could lead to greater operational efficiency within insurance companies. Competition will increase as a stronger industry may attract more players and investments, leading to increased competition and potentially better products and services for consumers. To operate efficiently and cater to emerging customer needs in a more robust market, insurers will likely increase their adoption of technology and innovation.”
Prior to this reform, life, non-life, composite, and reinsurance companies have operated with minimum capital requirements of N2 billion, N3 billion, N5 billion, and N10 billion respectively since the last recapitalisation exercise in 2007.
