Insurance companies get 12-month window for recapitalisation

Nigeria’s insurance operators and reinsurance companies have been given a 12-month deadline to comply with significantly higher capital requirements, following the commencement of the Nigerian Insurance Industry Reform Act (NIIRA) 2025. The new legislation, recently signed into law, represents one of the most far-reaching reforms in the nation’s insurance sector in decades. It repeals several outdated provisions, introduces a modernised risk-based capital framework, and is positioned as a critical driver in the federal government’s ambition to grow the economy to $1 trillion. According to Section 15(6) of Part IV of the Act, insurers registered before the commencement of NIIRA 2025 must meet the new capital thresholds within 12 months Failure to comply will result in the cancellation of operating licences, with the National Insurance Commission (NAICOM) mandated to publish a list of compliant firms within 30 days of the deadline. The Act stipulates that no company may carry on insurance business in Nigeria without maintaining the prescribed minimum capital or the higher risk-based capital determined by NAICOM.
For non-life insurance business, the threshold is set at ₦15 billion or a risk-based capital requirement as determined by the Commission, whichever is higher.
In the case of life assurance business, the required capital is ₦10 billion or a risk-based capital requirement as determined by the Commission, whichever is higher. For reinsurance business, the minimum is ₦35 billion or a risk-based capital requirement as determined by the Commission, whichever is higher. Under the risk-based capital model, NAICOM will consider exposure to insurance risk, market risk, credit risk, and operational risk, applying “capital charges” to account for potential deterioration in asset value and uncertainty in liability estimates arising from adverse events. For new companies, the minimum capital requirement may be met through government bonds, treasury bills, or cash equivalents. For existing companies, capital may include the excess of admissible assets over liabilities (excluding own shares), approved subordinated liabilities, and other financial instruments as prescribed by the Commission. Section 15(7) of the Act empowers NAICOM to revoke the registration of any insurer or reinsurer that fails to meet the stipulated capital within the one-year window. Furthermore, under Section 15(8), NAICOM retains discretion to raise capital requirements beyond the stated thresholds, taking into account the size, complexity, and risk profile of individual firms