Inflation, FX Fluctuations Impeding Insurance Recapitalisation Exercise -Omosehin
By Sunday Etuka
The Commissioner for Insurance, National Insurance Commission (NAICOM), Mr Ayo Omosehin, has stated that macroeconomic volatility, especially inflation and foreign exchange fluctuations are impacting insurance firms’ push to meet the capital adequacy requirement deadline set by the Commission.
Mr Omosehin, spoke at the EY Insurance Summit on the Nigerian Insurance Industry Reform Act (NIIRA), held on Thursday in Lagos.
TheFact Daily reports that following the enactment of the NIIRA 2025 in July this year (2025), the NAICOM announced a 12-month recapitalization exercise for insurance and reinsurance companies operating in Nigeria under a Risk-Based Capital (RBC) model.
As designed by the Commission, any firm that is unable to raise fresh capital is at risk of forced merger, acquisition or liquidation.
The NIIRA 2025 legislation introduced a higher Minimum Capital Requirements (MCR) of N10 billion (US$6.7 million) for life, N15 billion(US$9.98 million) for non-life, N25 billion (US$16.6 million) for composite and N35 billion (US$23.3 million) for reinsurance companies in Nigeria with a deadline of July 2026.
Speaking at the strategic Summit, the NAICOM boss said although the sector has recorded a significant progress since the passage of the Act, M&A Complexities, and macroeconomic volatility remain a challenge.
Mr Omosehin, also identified capacity gap as a challenge, noting that capital alone does not equal capability, adding that underwriting expertise and risk management frameworks are essential.
Represented by the Deputy Commissionerfor Insurance, Finance and Administration, Dr Usman Jankara, the NAICOM boss explained that the Act was a landmark legislation designed to strengthen financial soundness, enhance policyholder protection, and align the industry with global best practices.
He said that as Nigeria aspires to a $1trillion economy by 2030, insurance must evolve from being a marginal player to becoming a central pillar of economic stability and growth.
Noting that NIIRA 2025 represents a forward-looking framework designed to secure long-term stability, foster innovation, and position the industry for sustainable growth and global competitiveness.
He highlighted some of the decisive steps taken by the Commission since the Act came into force to ensure clarity, transparency, and orderly implementation as follows:
“We have issued Guidelines and Circularssuch as the Policy Circular and then Guidelines on Minimum Capital Requirement(MCR) detailing admissible and non-admissible assets, liabilities, and compliance timelines.
“Mandatory Submission of RecapitalizationPlans: All insurers and reinsurers submitted their plans by the September 30deadline. The plans were reviewed and the outcome conveyed to the affected.“Regulatory Oversight: A dedicated Recapitalization Committee monitors compliance, reviews monthly returns, and engages stakeholders continuously.
“Capital Verification Framework: To guarantee integrity, NAICOM partnered withthe Big 4 audit firms—including EY—for independent verification of compliance with the Minimum Capital. This collaboration ensures credibility, transparency,and confidence in the process.
“Escrow Account Requirement: Funds raised forrecapitalization shall be deposited in dedicated escrow accounts with the CentralBank of Nigeria, reinforcing governance and safeguarding policyholder
interests.
“Guidelines on Reinsurance have also been issued. We have also issued exposuredrafts of Guidelines for Registration and Renewals, as well as Guidelines forForeign or International Health Insurance & Reinsurance Providers, for operators’ and stakeholders’ comments and inputs.
“Additional Guidelines currently in the works includeGuidelines on Product Development and Sale, Suitability and Fit-and-Proper forPrincipal Officers, with others to follow such as Guidelines on Claims Management, Takaful Operations, and Microinsurance,etc.
“Industry response has been encouraging with a significant number of insurers haveindicated readiness for capital verification. Boards have approved strategies for fresh capital injection, mergers, and operational restructuring.
“The Commission has completed reviews of recapitalization plans and issued feedback to institutions.”
