Many Insurers ready for Capital Verification- NAICOM
Ahead of the recapitalization exercise of the insurance industry, National Insurance Commission has said a good number of insurers have indicated readiness for capital verification.
Usman Jankara, Deputy Commissioner for Insurance disclosed this in his keynote address at the EY Insurance Summit on the Nigerian Insurance Industry Act 2025 held in Lagos.
Jankara who represented the Commissioner for Insurance, Olusegun Omosehin at the occasion said Boards have approved strategies for fresh capital injection, mergers, and operational restructuring, adding that the Commission has completed reviews of recapitalization plans and issued feedback to institutions.
He said the dialogue is a commendable development as this will foster renewed engagement and collaboration for the growth of the Nigerian insurance industry as well as contribute resilience and competitiveness of the Nigerian economy.
Explaining the rational for the enactment of the Act, the NAICOM boss said Nigerian Insurance Industry Reform Act 2025 (NIIRA 2025) is a landmark legislation designed to strengthen financial soundness, enhance policyholder protection, and align the industry with global best practices, stressing that as Nigeria aspires to a $1 trillion economy by 2030, insurance must evolve from being a marginal player to becoming a central pillar of economic stability and growth.
According to him, NIIRA 2025 represents a forward-looking framework designed to secure longterm stability, foster innovation, and position the industry for sustainable growth and global competitiveness.
Achievements Since Enactment
Since the Act came into force, NAICOM has taken decisive steps to ensure clarity, transparency, and orderly implementation:
• We have issued Guidelines and Circulars such as the Policy Circular and then Guidelines on Minimum Capital Requirement (MCR) detailing admissible and non-admissible assets, liabilities, and compliance timelines.
o Mandatory Submission of Recapitalization Plans: All insurers and reinsurers submitted their plans by the September 30 deadline. The plans where reviewed and the outcome conveyed to the affected companies. Monthly progress reporting is now mandatory.
o Regulatory Oversight: A dedicated Recapitalization Committee monitors compliance, reviews monthly returns, and engages stakeholders continuously.
o Capital Verification Framework: To guarantee integrity, NAICOM partnered with the 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.
o Escrow Account Requirement: Funds raised for recapitalization shall be deposited in dedicated escrow accounts with the Central Bank of Nigeria, reinforcing governance and safeguarding policyholder interests.
• Guidelines on Reinsurance has also been issued. We have also issued exposure drafts of Guidelines for Registration and Renewals, as well as Guidelines for Foreign or International Health Insurance & Reinsurance Providers, for operators’ and stakeholders’ comments and inputs. Additional Guidelines currently in the works include Guidelines on Product Development and Sale, Suitability and Fit-and-Proper for Principal Officers, with others to follow such as Guidelines on Claims Management, Takaful Operations, and Microinsurance, etc.
Current Progress
Industry response has been encouraging with a significant number of insurers have indicated 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.
Challenges and NAICOM’s Role
We acknowledge the realities:
• M&A Complexities: Cultural integration and strategic alignment require careful navigation.
• Macroeconomic Volatility: Inflation and foreign exchange fluctuations impact capital raising.
Capacity Gaps: Capital alone does not equal capability; underwriting expertise and risk management frameworks are essential.
NAICOM’s approach remains principle-based; providing clarity and certainty while enabling innovation within a safe and sound regulatory environment.
Strategic Vision Beyond Compliance
Our goal is not compliance for its own sake, but resilience and competitiveness. This vision rests on our ability to:
1. Adopt Digital Transformation by leveraging on Insurtech, AI-driven fraud detection, IoT-enabled risk prevention, and seamless digital platforms.
2. Ensure ESG Integration by embedding sustainability principles in underwriting and investment decisions to align with global standards and attract responsible capital.
3. Exploit AfCFTA Opportunities by leveraging stronger balance sheets to compete regionally, develop cross-border products, and participate in large-scale infrastructure and trade-related risks.
4. Integrate Data and Analytics in insurance operations by building local risk models and actuarial capacity to address emerging risks such as climate change, cyber threats, and health crises.
Audit Integrity and Governance
Transparency and integrity of the MCR verification exercise are non-negotiable. This is why we are partnering with the Big 4 firms to conduct independent verification of the MCR of all insurance companies. What we are doing is akin to the scanner at airports. Every entity must pass through the scanner to validate compliance with the MCR. Our partnership with the Big 4 firms ensures independent validation of compliance with the MCR in line with extant laws and regulations. This collaboration is a cornerstone of investor confidence and market credibility.
Roadmap for Risk-Based Capital (RBC) Implementation
Recapitalization is the foundation, not the finish line. Immediately after the successful completion of the MCR exercise and licensing of compliant insurers, NAICOM will commence RBC implementation.
The RBC Framework is already concluded and will soon be re-exposed for stakeholder comments.
• The RBC Toolkit for analysis is nearing completion and will be used for RBC computation.
• RBC will align capital requirements with the risk profile of each institution, encouraging prudent risk management and capital allocation.
Impact of IFRS 17 and Actuarial Capacity
The implementation of IFRS 17 introduces new complexities in valuation and reporting. Actuaries will play a critical role in pricing compulsory insurance. assessing liability valuations, supporting RBC computations and enhancing NAICOM’s regulatory data collection and analytics infrastructure.
The Commission is finalizing arrangements to engage an Actuary to strengthen these areas and support industry-wide actuarial capacity development.
Regulatory Expectations
NAICOM expects all stakeholders to rise to the occasion:
• Insurance and Reinsurance Companies:
o Full compliance with MCR timelines and guidelines. o Transparent reporting and prompt submission of monthly progress returns. o Adoption of sound risk management frameworks and investment in technology for operational efficiency.
o Commitment to prompt claims settlement and customer-centric practices.
• Actuarial Firms and Professionals:
o Support insurers in IFRS 17 implementation, liability valuation, and RBC readiness. o Provide robust pricing models for compulsory insurance and emerging risks.
o Collaborate with NAICOM to strengthen industry-wide actuarial capacity.
Auditing Firms (including EY): o Ensure integrity and independence in capital verification exercises. o Uphold global best practices in governance, risk, and compliance audits.
o Provide advisory support for ESG integration, digital transformation, and AfCFTA readiness.
• Other Stakeholders (Brokers, Technology Partners, Investors): o Drive innovation in distribution and customer engagement. o Invest in Insurtech solutions and data analytics capabilities. o Collaborate with NAICOM to deepen insurance penetration and financial inclusion.
Commitment to Collaboration
The current management of NAICOM is fully committed to working with all stakeholders – insurers, reinsurers, brokers, loss adjusters, actuaries, auditors, and technology partners – to change the narrative of the Nigerian insurance industry. Our shared goal is a sector that is resilient, innovative, and globally competitive.
Closing Call to Action
Distinguished leaders, NIIRA 2025 is our collective pact with the Nigerian people; a commitment to resilience, trust, and innovation. Compliance is only the beginning. Together, we must build an industry that is digitally native, ESGconscious, regionally competitive, and globally respected.
The NAICOM of today stands ready to guide, engage, and collaborate. As I said yesterday at another event, let us seize this moment, not as a regulatory burden, but as a strategic opportunity to redefine the future of insurance in Nigeria and across Africa.
