With barely a month to the July 31 recapitalisation deadline set by the National Insurance Commission, NAICOM, only 25 of Nigeria’s over 58 licensed insurance companies have submitted applications to appointed auditors for capital verification.
The development has raised fresh concerns over the readiness of many operators to meet the new regulatory capital requirements under the Nigerian Insurance Industry Reform Act, NIIRA, 2025.
So far, at least eight insurance companies have approached the capital market to raise fresh funds, while several others are exploring mergers, acquisitions and strategic investments to avoid the risk of losing their operating licences.
Industry estimates suggest that insurers collectively need close to ₦1 trillion in fresh capital to meet the new thresholds.
Under the NIIRA 2025 framework, life insurance companies are required to raise their minimum paid-up capital from ₦2 billion to ₦10 billion, while non-life insurers must increase theirs from ₦3 billion to ₦15 billion.
Composite insurers are expected to raise their minimum capital to ₦25 billion, while reinsurance companies are required to meet a new threshold of ₦35 billion.
The transition window for existing operators is now nearing its end, with NAICOM insisting that the July 31 deadline remains unchanged.
This is despite concerns from industry experts who argue that an extension may be inevitable, given the slow pace of capital mobilisation and the difficult economic environment.
Operators say insurers are seeking capital at a time when investors are still digesting the banking sector recapitalisation exercise, during which banks raised about ₦4.65 trillion to meet new paid-up capital requirements.
Unlike banks, which were given 24 months to comply, insurance companies were given one year.
Already, at least three operators have indicated readiness for recapitalisation by depositing 10 per cent of their required capital into the Central Bank of Nigeria-managed Policyholders’ Protection Fund, as required by NAICOM.
However, most underwriters are still under pressure, with many considering merger and acquisition options.
Industry sources say negotiations are stalled in several cases due to valuation disputes, governance concerns, investor caution and uncertainty over future regulatory treatment.
The recapitalisation exercise is being described by stakeholders as a defining moment for the future structure, stability and competitiveness of Nigeria’s insurance industry.
However, the process is being complicated by years of poor corporate governance, late and irregular filing of financial statements, weak underwriting discipline, poor claims management and low insurance penetration, estimated at less than one per cent.
There are also fears that some companies may be forced to downsize or restructure if they fail to attract fresh capital, raising concerns over possible job losses across the sector.
Multiple sources close to NAICOM said the regulator remains determined to fully implement the new capital regime.
Speaking at the EY Insurance Summit in Lagos, the Deputy Commissioner for Insurance, Finance and Administration, Usman Jankara, warned that expressions of interest would not be enough to save any operator.
According to him, only companies with verified and admissible capital will retain their operating licences after the deadline.
He identified persistent challenges facing the sector to include complex merger and acquisition processes, macroeconomic volatility affecting capital raising, and capacity gaps in underwriting and risk management.
Several insurance firms are said to have opened discussions with pension fund managers, asset managers and high-net-worth investors within and outside Nigeria.
Some companies are also reportedly courting strategic investors from Europe, South Africa and the Middle East in the hope of securing long-term capital and technical expertise.
But those talks are said to be slow and complicated, especially due to concerns around regulatory risk, governance standards and the ease of repatriating investment returns.
While large and well-capitalised insurers appear better positioned because of retained earnings and shareholder support, many mid-tier and smaller firms are struggling to meet the new capital requirement and are hoping for regulatory flexibility.
The pressure is also affecting investor sentiment in insurance stocks.
Although the All-Share Index has recorded a year-to-date growth of about 49 per cent, the insurance index has lost 1.75 per cent midway into the year, making it the only market index with negative performance so far.
This contrasts with last year, when the signing of NIIRA helped the insurance sector record a 65.6 per cent gain, outperforming the broader market’s 52 per cent growth.
Despite the challenges, the Nigerian Insurers Association has backed the recapitalisation exercise, describing it as necessary for building a stronger and more credible insurance industry.
The Director-General of the NIA, Bola Odukale, said the association was committed to supporting its members to comply with the new regime.
She dismissed fears that the exercise was designed to force operators out of the market, arguing that the framework provides flexibility for weaker firms to merge with stronger ones.
According to her, stronger capital bases will enable insurers to retain more risks locally, improve claims-paying capacity and invest in digital platforms that can expand insurance access and improve customer experience.
The National Coordinator of the Independent Shareholders Association of Nigeria, Sunny Nwosu, however, said the protection of policyholders must remain central to the process.
He argued that beyond raising capital thresholds, the government must take deliberate steps to deepen insurance penetration and rebuild public confidence in the sector.
Nwosu said government patronage of insurance products would help strengthen the industry, noting that many government-owned vehicles on Nigerian roads are either uninsured or covered only by basic third-party policies.
“If the government leads by example and fully embraces insurance, it will encourage Nigerians to do the same. The widespread public distrust of insurance companies remains a major obstacle to growth in the industry,” he said.
An insurance consultant, Akinwale Ogundele, welcomed the reform, saying a leaner but better-capitalised industry could restore confidence in insurance as a risk management tool.
He, however, urged regulators to monitor pricing practices to ensure that the cost of recapitalisation is not passed to consumers through higher premiums.
The President of the Progressive Shareholders Association, Boniface Okezie, also expressed concern over governance gaps in some firms, warning that capital alone would not solve problems relating to underwriting discipline, claims management and corporate governance.
Okezie said the timing of the exercise was difficult, given Nigeria’s fragile macroeconomic environment, high interest rates, exchange-rate volatility and tight liquidity.
He urged NAICOM to consider giving insurance companies additional time, possibly one year, to mobilise the required capital.
For now, NAICOM maintains that the deadline stands, leaving operators with limited time to raise capital, merge, attract new investors or risk regulatory sanctions.
The post “Only 25 Insurers Begin Capital Verification” — NAICOM Insists On July 31 Deadline As Firms Race To Meet ₦1tn Recapitalisation Requirement appeared first on TheNigeriaLawyer.
