Insurers’ capitals: Senate passes 2024 Nigerian Insurance Industry Reform Bill

Pegs life, general, reinsurers’ capitals at N10bn, N15bn, N35bn

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The Senate has passed the 2024 Nigerian Insurance Industry Reform Bill, marking a major move for the insurance and reinsurance companies to get new operating capital base.

This Bill, which comprises of many regulations to transform different aspects of the Nigerian Insurance Industry, followed the adoption of the report by the Committee on Banking, Insurance, and other Financial Institutions.

The minimum capitals required for life, non-life and reinsurance businesses were raised to 10bn, N15bn , and N35bn respectively, from previous capitals of N2bn, N3bn and N10bn the operators had worked with since the last recapitalization exercise in 2007.

The report was presented by the committee’s Chairman, Sen. Abiru Adetokunbo (APC-Lagos), during Tuesday’s plenary session.

Following this new development, if passed by the House of Representatives and given presidential approval, the operators will be operating with new capitals at the end of the process.

However, industry sources have said there might be a two-year regulatory period for the companies to raise the capitals needed to meet the new requirements.

Findings by Dailyeconomy showed that while some companies already have enough capital required under the new dispensation, many who had expected the raise are still making efforts to comply with the directive when eventually implemented.

According to the Senate, the risk-based capital required that, “The commission shall take into consideration the capital for insurance risk, market risk and operational risk, and apply such capital changes on assets and liabilities as shall be determined from time to time.”

It added that, “The increase in minimum capital from the current capital of N2bn to N10bn (life), N3bn to N15bn (non-life) and N10bn to N35bn (reinsurance) is necessitated by depreciation in the value of the currency, Finance Act 2022 which has redefined the composition of the capital, inflation, international competitiveness, AfCFTA competitiveness, capital flight due to overreliance on foreign insurance, emerging risks such as cyber insurance, insurance, consumer credit insurance, etc.”