NAICOM releases exposure draft on minimum capital requirements for insurance companies

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The National Insurance Commission has released exposure draft on ‘Insurance Risk Based Capital Regulation, 2024 for insurance companies.

This was disclosed in a circular No: NAICOM/TD/SUP/FA to CEOs of insurance institutions, signed by the Director (Supervision, Dlrectorate), Oluwatoyin Charles, for the Commissioner for Insurance, which was obtained by Dailyeconomy on Sunday.

According to the draft, “The minimum capital requirements prescribed for the purposes of the Act is: In the case of a non-life insurer, N10bn; in the case of a life insurer, N8bn; in the case of a reinsurer, N20bn.”

The regulated entities were given a deadline of 11th November 2024 to send their feedbacks.

NAICOM’s circular states that, “We are pleased to forward the draft Insurance Risk Based Capital Regulation 2024 (RBC Regulation) as attached. The concept of Risk-Based Capital refers to the principle for assessing Capital Adequacy adopting globally accepted regulatory standards for supervision of the insurance institution in line with Insurance Core Principles (ICP) 17.

“The draft RBC Regulation adopts a total balance sheet approach in establishing the regulatory capital requirements to address some of the relevant and material risks categories (i.e. Insurance, Market, Credit, and Operational Risks) of individual insurer(s).

“To ensure the draft RBC Regulationis effective and practical, we invite your feedback and comments on the draft. Your input will greatly contribute to the finalization of the Regulation.

“Kindly provide your feedback on or before 11th November 2024 via email.”

The circular adds that the objective of this Regulation is to ensure that insurers maintain a capital adequacy level that is commensurate to their risk profile.

An insurer shall develop and implement an internal capital management policy, and the regulation will apply to all insurers registered under the Act where appropriate, the draft stated.