NAICOM Raises Insurance Capital Requirements for Life, Non-Life, Reinsurance Companies
- The National Insurance Commission (NAICOM) has raised the capital requirements for insurance companies in Nigeria
- The new Nigerian Insurance Industry Reform Act 2025 mandates insurers to meet new requirements within a year of the law’s implementation
- This law represents a significant increase, with life and non-life insurers seeing a 400% rise and reinsurance companies a 250% increase in their capital base
Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.
The capital requirement for insurance companies in Nigeria has been raised by the National Insurance Commission (NAICOM).
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The Nigerian Insurance Industry Reform Act 2025 mandates that life insurance companies have at least N10 billion in capital, while non-life insurers must have a minimum capital base of N15 billion.
The largest boost was given to reinsurance companies, whose capital threshold is now set at N35 billion.
“A person shall not carry on insurance business in Nigeria unless the insurer has and maintains, while carrying on that business, a minimum capital, in the case of non-life insurance business, the higher of N15,000,000,000 or risk-based capital determined by the commission,” the Act said.
“For life assurance business, the higher of N10,000,000,000 or risk-based capital determined by the commission.
“For reinsurance business, the higher of N35,000,000,000 or risk-based capital determined by the commission.
“In determining the risk-based capital required, the Commission shall take into consideration the capital for insurance risk, market risk, credit risk, and operational risk and apply such capital charges on assets and liabilities as shall be determined.
“For the purpose of this section, ‘capital charge’ means the proportion of capital required to take care of the potential deterioration of the economic value of an asset and the uncertainty in estimating liability due to the occurrence of an adverse event.”
The minimum capital required for a new insurance company may consist of government bonds, treasury bills, or cash and cash equivalents, according to the Act.
The Cable reported that prior to the law, the required capital base for reinsurance firms, non-life, and life insurance companies was N10 billion, N3 billion, and N2 billion, respectively.
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This represents a 400 percent increase for life and non-life insurance companies and a 250 percent increase for reinsurance organizations.
“The minimum capital requirement as specified in subsection (1) shall, in the case of an existing company, consist of one or more of — (a) the excess of admissible assets over liabilities, less the amount of own shares held by the firm; (b) subordinated liabilities subject to approval by the commission; (c) any other financial instrument as may be prescribed by the commission,” the Act said.
The law further stipulated that within a year of the Act's implementation, insurers that were already in operation prior to its implementation must comply with the additional capital requirements.
New Industry act mandates insurance for gas stations
Legit.ng reported that President Bola Ahmed Tinubu signed the Nigerian Insurance Industry Reform Act (NIIRA) last week, which requires all gas and petroleum filling stations, as well as the vehicles that transport these goods, to be insured against third-party losses resulting from unintentional fire or explosion.
In accordance with the document that the National Insurance Commission (NAICOM) formally made public, owners of gas and petroleum refilling stations who do not have third-party insurance face a two-year jail sentence.
In particular, Section 75 of the NIIRA Act mandates that gas and petroleum stations carry insurance against third-party losses in the event of a fire or explosion. Additionally, a copy of the insurance certificate must be prominently displayed at refilling stations or included in transport documents.
Source: Legit.ng
