Yemisi Izuora
The National Insurance Commission (NAICOM) has said that the recently concluded recapitalization programme was guided by the law, prudential principles and the long-term interests of the Nigerian insurance industry.
While putting the whole exercise in proper perspective, the Commissioner for Insurance, Olusegun Omosehin further explained that NAICOM provided opportunities for companies to explore mergers and other forms of strategic restructuring, but operators had to make their own commercial decisions.
“The objective had always been to strengthen the industry, improve the financial resilience of the sector, and enhance consumer protection,” he said.
Omosehin, during a media chat in Lagos on Friday, asserted that the exercise was never designed to eliminate operators from the market, saying the regulatory initiative was primarily aimed at creating stronger, financially resilient insurers capable of underwriting larger risks and protecting policyholders.
Omosehin said the Commission had, from the outset, maintained that no operator would be deliberately pushed out of the market, but had encouraged companies that could not independently meet the new capital requirements to consider mergers, partnerships, strategic combinations or other restructuring options.
According to him, however, while the regulator could create an enabling environment for such arrangements, it could not compel operators to take advantage of them.
“The capital exercise was never intended to eliminate any operator from the market. That wasn’t the intention,” Omosehin said.
He explained that the essence of the exercise was to provide a platform for companies to combine their strengths and remain viable, rather than allowing weaker operators to continue operating with inadequate capital.
“Having a 5% of a thriving business is better than 0% of a cancelled licence. 100% of a cancelled licence makes no sense because you no longer get anything,” he said.
The Commissioner said the outcome of the exercise should therefore be viewed within the broader objective of strengthening the industry rather than simply reducing the number of operators.
The exercise was triggered by the enactment of the Nigerian Insurance Industry Reform Act (NIIRA) 2025, which introduced a new regulatory framework for the insurance industry and repealed several older insurance laws.
The Act provides for new minimum capital requirements and gives NAICOM the statutory authority to enforce compliance. Under the new regime, the minimum capital requirement was raised to ₦10 billion for life insurers, ₦15 billion for non-life insurers, ₦25 billion for composite insurers and ₦35 billion for reinsurers.
The law gave existing operators a 12-month period from its commencement to meet the new requirements. It also provides that an insurer or reinsurer that fails to satisfy the applicable capital requirement may have its registration cancelled.
NAICOM’s recapitalisation framework was therefore not simply a voluntary fundraising programme but the implementation of a statutory requirement contained in the new law.
The exercise he went further to explain was intended to strengthen the financial capacity of insurers, enhance their ability to underwrite larger and more complex risks, improve claims-paying capacity, strengthen market resilience and ultimately protect policyholders.
Capital adequacy as a shield for policyholders
Omosehin said the ultimate beneficiary of the exercise should be the Nigerian policyholder.
He explained that an adequately capitalised insurance company would be in a stronger position to honour claims, absorb unexpected losses and take on larger risks without exposing policyholders and other stakeholders to unnecessary financial vulnerabilities.
The Commissioner said the regulator’s responsibility was therefore comparable to setting the rules of a road: establishing the lanes, speed limits and conditions under which operators must conduct their businesses.
He stressed that NAICOM was not an operator in the market but existed to ensure that operators complied with established regulatory and prudential requirements.
The Commissioner’s position is consistent with the broader objectives of NIIRA 2025, which strengthened NAICOM’s regulatory responsibilities in areas including licensing, supervision, capital adequacy, market conduct, consumer protection, product approval, enforcement and industry development.
While stressing that elimination was never the objective, Omosehin acknowledged that some operators ultimately failed to meet the requirements and had to face regulatory consequences.
The recapitalisation exercise is also expected to trigger further strategic changes within the industry.
Omosehin said mergers and combinations could occur even outside a formal recapitalisation exercise as shareholders and investors reassess the sustainability and competitiveness of individual businesses.
He noted that raising capital could prompt companies to review their strategies and consider whether combining strengths with another operator would produce greater value.
The Commissioner said such developments should be regarded as part of the natural evolution of a more competitive insurance market.
He added that the exercise had demonstrated strong investor appetite for the Nigerian insurance industry, with the majority of investors participating in capital raising reportedly coming from domestic sources.
For NAICOM, however, raising capital represents only the beginning of a broader transformation of the industry.
Omosehin said the Commission would now focus on deepening insurance penetration, expanding distribution channels, promoting financial inclusion, supporting digital innovation and insurtech development, improving claims settlement and strengthening risk-based supervision.
The Commission is also moving towards a Risk-Based Capital (RBC) framework, under which the capital requirement of an insurer would increasingly be assessed in relation to the size and nature of the risks it carries.
This represents a shift from simply asking whether an insurer has met the minimum capital threshold to examining whether its capital is adequate for the risks on its books.
NAICOM has indicated that the RBC framework is being developed with actuarial input and is expected to undergo stakeholder engagement before implementation.
Omosehin described recapitalisation as “merely a pathway, not necessarily a destination”, stressing that the ultimate objective was to build a modern, resilient and focused insurance sector capable of supporting Nigeria’s economic development.
The Commissioner linked the transformation of the insurance industry to the broader ambition of positioning the Nigerian economy for stronger growth, arguing that a more financially capable insurance sector would be better placed to underwrite major infrastructure, industrial and commercial risks.
He said the industry must therefore move beyond merely meeting regulatory capital thresholds and translate its stronger balance sheets into greater underwriting capacity, improved service delivery and stronger protection for policyholders.
“Having done the race, this is just the starting point because this is just the foundation,” Omosehin said.
For the regulator, the real test of the recapitalisation exercise will therefore not simply be how much capital insurers have raised, but whether the stronger capital base ultimately produces a more resilient industry, better claims-paying capacity, wider insurance access and greater contribution to Nigeria’s economic development.