MARKET NEWS

By Oluwakemi Abimbola

The National Insurance Commission has warned that insurance companies that fail to meet the July 2026 recapitalisation deadline will face strict regulatory action, including liquidation or merger.

In a circular directed to all insurance and reinsurance companies in Nigeria, the Deputy Commissioner (Technical), Dr Usman Jankara, stated that the commission would not hesitate to take action against non-compliant companies.

The newly signed Nigerian Insurance Industry Reform Act 2025 mandates new Minimum Capital Requirements for insurance players, with life insurance firms expected to increase their capital to N10bn, non-life insurance to N15bn, and reinsurance companies to N35bn.

“Upon fulfilment of the new MCR, payment of the requisite fees and confirmation by the commission, the successful insurance and reinsurance company shall be issued a new licence by the commission,” the circular read. “Any company that fails to meet the prescribed MCR within the stipulated timeframe shall be subject to liquidation, merger, or any other regulatory resolution action as may be deemed appropriate by the Commission.”

Jankara affirmed that the new MCR takes effect from the date of Presidential assent, July 31, 2025, and insurers and reinsurers have been given a 12-month period to comply with the new requirements.

The commission would issue comprehensive guidelines and circulars detailing the modalities for the recapitalisation exercise, including the composition of the MCR, acceptable forms of capital, and procedures for capital verification.

The NAICOM deputy commissioner also outlined the criteria for asset recognition, stating that encumbered assets, assets without perfected title or ownership, and assets not in the full possession of an insurer/reinsurer shall be inadmissible to meet the MCR. “Assets that exceed prudential thresholds or do not meet the prescribed criteria shall also be deemed inadmissible,” he added.

NAICOM noted that it would engage with relevant regulators to secure incentives and concessions that may ease compliance and reduce the cost of the exercise. Jankara urged all insurance and reinsurance companies to commence internal preparations, outline a recapitalisation plan, and take immediate steps to comply with the new minimum capital requirements within the stipulated 12-month period.

The commission’s warning is a clear indication that it is determined to ensure compliance with the new regulations and strengthen the insurance industry in Nigeria. Insurers and reinsurers that fail to meet the recapitalisation deadline may face severe consequences, including liquidation or merger.