NAICOM to release framework for reviewing insurers’ risk portfolios against capital levels in October

Nike Popoola

The National Insurance Commission (NAICOM) is set to start reviewing the size of risk portfolios held by insurance companies in relation to their capital levels under the Minimum Capital Requirement (MCR) framework.

The Commissioner for Insurance, Mr Olusegun Ayo Omosehin, disclosed this on Friday during a press briefing in Lagos, while giving an update on the just-concluded recapitalisation exercise in the insurance industry under the Nigerian Insurance Industry Reform Act 2025 (NIIRA).

Omosehin explained that the MCR represented the least capital an insurance entity could have, adding that companies holding large risk portfolios would need to match them with appropriate levels of capital.

He said the commission would begin to assess the relationship between the size of each entity’s risk portfolio and its available capital.

“We will then begin to look at the size of the portfolio of risk an entity holds in relation to the capital that they have. The Minimum Capital Requirement (MCR).

The minimum is the least an entity can have,” he said.

According to him, depending on the size of an insurer’s portfolio, an entity holding a huge amount of risk would need to match it with appropriate levels of capital.

He added that some insurance companies might need to seek additional capital, depending on the parameters and framework to be established.

“So there might be entities that would now need to even, having set the parameters and the framework, that might then need to look for additional capital, where possible, and that process is already on,” he said.

The commissioner disclosed that NAICOM had appointed Ernst & Young (EY) Actuaries to work with the commission on the framework.

He said the appointment was announced to the market a couple of months ago, adding that the framework was almost completed.

“That’s EY Ernst and Young Actuaries. They are working with us, so the framework is almost completed, and we are hoping we can release this to the market on or before first of October, where people can make appropriate comments,” Omosehin said.

He noted that substantial work was already ongoing within the period, alongside further engagement with operators in the insurance market.

The commissioner emphasised the commission’s willingness to work with insurance operators throughout the process.

“But the most important thing for you to note is the fact that we’re happy to work with our operators in this process,” he said.