Insurance companies to recapitalize in 12 months as new Act commences— NAICOM
National Insurance Commission
Nike Popoola
Insurance and reinsurance companies have been given 12 months to recapitalize under the new Nigerian Insurance Industry Reform Act (NIIRA) 2025.
This is according to Section 15 Subsection 6 of Part IV under the Capital Requirement of the NIIRA Act 2025,obtained by Dailyeconomy today.
“An insurer registered before the commencement of this Act shall comply with the requirements within 12 months of the commencement of this Act,” the section states.
President Bola Tinubu assented to the NIIRA Act 2025 recently, a landmark legislation to strengthen Nigeria’s financial sector and accelerate the nation’s march toward a $1 trillion economy.
The new legislation repeals several outdated laws, and makes new provisions. The new capitals under the new legislation in Part IV are as follows:
15. (1) A person shall not carry on insurance business in Nigeria unless the insurer has and maintains, while carrying on that business, a minimum capital, in the case of —
(a) Non-life insurance business, the higher of (i) ₦15,000,000,000, or (ii) risk-based capital determined by the Commission.
(b) Life assurance business, the higher of (i) ₦10,000,000,000, or (ii) risk-based capital determined by the Commission; and
(c) Reinsurance business, the higher of (i) ₦35,000,000,000, or (ii) risk-based capital determined by the Commission.
(2) In determining the risk-based capital required, the Commission shall take into consideration the capital for insurance risk, market risk, credit risk and operational risk, and apply such capital charges on assets and liabilities as shall be determined.
(3) For the purpose of this section, “capital charge” means the proportion of capital required to take care of the potential deterioration of the economic value of an asset and the uncertainty in estimating liability due to the occurrence of an adverse event.
(4) The minimum capital requirement specified in subsection (1) may in the case of a new company consist of one or more of (a) Government Bonds and Treasury Bills; or (b) cash and cash equivalent.
(5) The minimum capital requirement as specified in subsection (1) shall, in the case of existing company, consist of one or more of (a) the excess of admissible assets over liabilities, less the amount of own shares held by the firm; (b) subordinated liabilities subject to approval by the Commission; and (c) any other financial instrument as may be prescribed by the Commission.
(6) An insurer registered before the commencement of this Act shall comply with the requirements within 12 months of the commencement of this Act.
(7) The Commission shall (a) cancel the registration of any insurer or reinsurer that fails to satisfy the provisions of subsection (1) as it relates to the category of operation of such insurer or reinsurer; and (b) not later than 30 days after expiration of the period specified in subsection (c), publish a list of all insurers that have complied with the provisions of this section.
(8) Where the Commission considers it appropriate, having regard to the nature, size and complexity of the insurance business carried on or proposed to be carried on by an insurer, and to the insurer’s risk profile, the Commission may issue a directive (a) requiring the insurer to increase its minimum capital to an amount higher than the minimum specified in this section or the regulations made under this section; or (b) increasing the minimum capital requirements applicable to an insurer to a higher sum than that specified in this section or the regulations made under this section.
