By Henry Uche
As the countdown begins to the July 2026 recapitalisation deadline for the Nigerian insurance sector, industry experts are expressing cautious optimism, citing that roughly 80 per cent of operators appear well-positioned to meet the requirements outlined in the new Nigerian Insurance Industry Reform Act (NIIRA) 2025.
Signed into law by President Bola Tinubu on July 31, 2025, NIIRA has been widely embraced by doyens of the insurance sector as a key legislative instrument aimed at strengthening capital bases, enhancing risk management frameworks and ultimately positioning Nigerian insurers for global competitiveness.
The Act, which mandates higher minimum capital requirements and introduces a risk-based capital (RBC) regime, is being viewed not only as a regulatory milestone but as a transformative mechanism to align Nigeria’s insurance sector with international best practices. Experts argue that a strong, recapitalized insurance industry serves as a critical safety net, hedging unforeseen risks for both individuals and businesses, while also contributing to wider economic resilience. In this context, a robust insurance sector complements a solid banking system, ultimately fostering the stability necessary for Nigeria’s $1 trillion economy ambition.
Implementation of NIIRA
The National Insurance Commission (NAICOM), the apex regulatory body, has begun taking deliberate steps to implement NIIRA. In anticipation of the new capital regime, insurance and reinsurance companies across Nigeria are adjusting operational, financial and strategic structures to meet the statutory requirements.
To oversee this process, NAICOM established a Recapitalisation Committee, chaired by Mrs. Oluwatoyin Charles, Director of Supervision.
The Committee’s primary mandate is to ensure the seamless implementation of the recapitalization exercise, including compliance with revised capital thresholds, the promotion of transparency, and verification of capital inflows.
At the inauguration of the 11-member Committee in Abuja, the Commissioner for Insurance, Mr. Olusegun Ayo Omosehin, emphasised the centrality of recapitalization in stabilizing the industry. “Recapitalisation is not just a statutory requirement; it is a strategic necessity for positioning the Nigerian insurance sector to play a more meaningful role in our national economy. The Committee must approach this task with professionalism, diligence, and a commitment to the collective good. NAICOM will provide the necessary support to ensure success,” he said.
Committee mandates, roadmap
Key responsibilities of the Committee include developing a Recapitalisation Roadmap, drafting guidelines and circulars, recommending the composition of minimum capital requirements, and identifying incentives from other regulatory authorities to facilitate compliance. The Committee is expected to submit monthly progress reports to NAICOM management and provide quarterly updates to the Governing Board and stakeholders.
NAICOM has expressed confidence in the Committee’s ability to successfully deliver on its mandate, signaling a significant step toward shaping a more resilient insurance industry. “The Committee’s success is vital to the industry’s stability and growth. With NIIRA 2025, NAICOM aims to position the insurance sector for greater transparency, innovation, and global competitiveness, fully aligned with the Federal Government’s vision of a $1 trillion economy,” the regulator said.
Circulars and compliance guidelines
In line with NIIRA, NAICOM issued a circular (Ref: NAICOM/CFI/DCT/NIIRA2025-RECAP/001) to all insurance and reinsurance companies, formally notifying them of the commencement of the recapitalization exercise. Section 15(1) of NIIRA prescribes the following new minimum capital requirements (MCR): Life insurance: N10 billion; Non-life/general insurance: N15 billion; Composite insurance: N25 billion and Reinsurance companies: N35 billion.
The circular further states that the risk-based capital (RBC) framework will guide capital assessment, ensuring that insurers are evaluated not only on capital size but on risk exposure and portfolio quality. The effective date for compliance is the date of Presidential assent (July 31, 2025), with all companies required to meet the MCR within 12 months, setting the deadline at July 31, 2026.
“In line with the provisions of the Act, the new MCR takes effect from the date of Presidential assent. A 12-month period has been provided for insurers and reinsurers to comply with the new MCR as well as the applicable RBC as may be determined. All insurers and reinsurers shall comply with the requirements on or before the 30th day of July 2026,” NAICOM emphasized.
Guidelines for compliance
NAICOM also indicated that it would issue comprehensive guidelines detailing modalities for the recapitalization exercise. These guidelines will cover: the composition of the MCR; acceptable forms of capital; procedures for capital verification; qualifying assets for MCR purposes, including criteria such as title, ownership, and existence and standardised template for MCR computation.
To ensure clarity, the regulator made it clear that certain assets would be inadmissible for MCR purposes, including: encumbered assets; assets without perfected title or ownership; assets not fully possessed by the insurer or reinsurer and assets exceeding prudential thresholds.
The circular also stated that NAICOM or its appointed agents would verify all qualifying assets. If further verification is deemed necessary, insurers are expected to bear the cost of non-standard assessments.
Upon fulfillment of the MCR, payment of requisite fees, and confirmation by NAICOM, a successful insurer or reinsurer will be issued a new licence. Companies failing to meet the deadline may face liquidation, merger, or other regulatory resolution actions.
“The Commission will engage with relevant regulators such as the SEC, CAC, and other stakeholders to secure appropriate incentives and concessions that may ease compliance and reduce costs. Implementation of the new MCR will be conducted transparently and fairly, with the goal of strengthening financial soundness, enhancing public confidence, and ensuring that the benefits of NIIRA accrue to the Nigerian people,” NAICOM stated.
Previous recapitalisation
Before the enactment of NIIRA, the insurance sector had faced recurring challenges regarding capital adequacy. The previous capital base, which required N2 billion for life insurance, N3 billion for non-life, N5 billion for composite, and N10 billion for reinsurance, was widely considered insufficient to support the sector’s growth and risk-bearing capacity.
The first phase of recapitalisation was mandated by NAICOM in June 2020, requiring incremental increases in capital for all insurance categories. Life insurers were to raise their capital from N2 billion to N4 billion in the first phase, and to N8 billion in the second phase. Non-life insurers were mandated to move from N3 billion to N5 billion, then to N10 billion. Composite insurers were expected to raise their capital from N5 billion to N9 billion, then to N18 billion, while reinsurers had to progress from N10 billion to N12 billion, and finally to N20 billion.
However, litigation by aggrieved companies delayed the exercise, and stakeholders began advocating for risk-based supervision rather than merely capital-focused regulation, arguing that insurance is fundamentally a risk management business.
Expert opinions
Despite these challenges, industry leaders remain cautiously optimistic. In October 2023, Mr. Tony Elumelu, Chairman of Heirs Holdings and UBA Group, recommended significantly higher capital thresholds: N30 billion for general/non-life insurers, N20 billion for life insurers, N50 billion for composite insurers, and N1 billion for insurance brokers. He argued that higher capitalization would enable Nigerian insurers to withstand market volatility and compete on the global stage.
Echoing this optimism, Dr. Jeff Duru, Managing Director/CEO of Universal Insurance Plc, said his company is well-prepared for the new MCR. “We have set our plans in motion. We are waiting for NAICOM to release detailed guidelines so we can implement them fully. On our end, preparations are already underway. Once the announcement is made, we will act promptly,” he said.
Duru also urged regulators to provide more time for compliance, suggesting an 18-month window instead of the current 12 months. “NAICOM is doing its work by setting timelines. Companies must respond proactively, but in my view, 12 months may not be sufficient for all operators,” he added.
Some insurance companies, when contacted for comment, preferred to remain silent, while others said that their Boards would take a formal position before responding.
Governance framework
The Director-General of the Nigerian Insurers Association (NIA), Mrs. Bola Odukale, emphasised that recapitalisation without strong corporate governance would be ineffective. Speaking at the annual retreat of the Risk, Audit, and Compliance Committee (RACC) in Abeokuta, Ogun State, she described the process as an opportunity to strengthen institutional resilience, rebuild trust, and deliver long-term stakeholder value.
Delivering the keynote address, titled “Insurance Industry Recapitalisation: Strengthening Governance Activities for Maximum Benefits,” Mrs. Odukale stressed that capital adequacy alone does not guarantee industry stability. “The true test lies in how well we govern through strong boards, sound risk management, effective internal controls, and transparent audit systems,” she said.
The DG reaffirmed NIA’s commitment to capacity building, digital adoption, and regulatory engagement that balances compliance with growth. She urged professionals in audit, risk, and compliance to leverage the retreat as a platform for actionable outcomes. “You are the sentinels of organizational discipline and trust. This is our opportunity to build a stronger, more credible industry,” she said.
The retreat also featured the launch of the second edition of the RACC magazine, which delves into artificial intelligence, internal controls, financial reporting, and sustainability, issues increasingly shaping the future of the sector.
Mrs. Oluwatoyin Charles, Director of Supervision at NAICOM and Chair of the 2025 Recapitalization Committee, reiterated that recapitalisation is a strategic tool for economic development. “With sufficient capital, we can ensure financial stability and attract foreign investment. Strong corporate governance is essential to achieving these goals,” she said, noting that NIIRA 2025 introduces new corporate governance provisions.
Charles added that NAICOM is developing clear guidelines on mergers and acquisitions, with timelines and roadmaps for submissions, helping companies navigate strategic adjustments in line with NIIRA’s objectives.
Chairman of RACC, Olugbenga Akinlalu, also highlighted the timeliness of the retreat, stressing its relevance as the industry undergoes recapitalization. Industry leaders engaged in knowledge-sharing and strategic brainstorming, cross-pollinating ideas to drive sector growth.
Academic perspective
From an educational standpoint, Dr. Olufemi Abass, an insurance lecturer at Lagos State University and immediate past Head of Department, expressed optimism over the preparedness of underwriters. He suggested that Nigeria would benefit more from fewer, stronger insurers rather than numerous struggling operators.
“I believe most insurance companies are prepared. The Act was widely discussed in the National Assembly, so it didn’t come as a surprise. They have no excuse for the July 2026 deadline. Twelve months is ample time for compliance,” Dr. Abass said.
He also endorsed the risk-based capital regulation, noting that assessment should focus on portfolio risks rather than sheer capital size. “You should not bite more than you can chew. Some companies will focus on their risk portfolios because their evaluations will depend on risk exposure. Some operators may even consider mergers or acquisitions. I would prefer fewer, but vibrant, insurance companies that are strong and globally competitive than many struggling firms. NIIRA 2025 is a step forward for the government, insurers, and other stakeholders—it will increase market penetration and boost customer confidence,” he added.
Analysts believe that recapitalisation, if executed effectively, will not only stabilize the insurance market but also enhance public trust, encourage foreign investment, and ensure that insurance companies are better equipped to support Nigeria’s broader economic ambitions.
While challenges remain, ranging from litigation and operational readiness to governance structures and strategic mergers, the proactive steps being taken by NAICOM, industry leaders, and academics signal a commitment to a sustainable, transparent, and globally competitive insurance industry.
Dr. Abass summarized the prevailing mood in the sector: “NIIRA 2025 has come to stay. It is a win-win for the government, insurers, and customers alike. With proper implementation, the sector will gain strength, credibility, and the ability to compete globally.
The next 12 months will be decisive, but I believe the industry is ready to rise to the occasion.”
The comprehensive overview demonstrates how Nigeria’s insurance sector is preparing for a major transformation. From NAICOM’s regulatory framework to the perspectives of CEOs, regulators and academics, the industry is engaging all stakeholders to ensure that recapitalization translates into financial stability, better risk management, and global competitiveness.
Experts say that as the July 2026 deadline approaches, the sector stands at a critical juncture, one that could redefine the landscape of insurance in Nigeria for decades to come.
