NAICOM Dismisses Extension of Insurance Recapitalisation Deadline

The National Insurance Commission has ruled out any extension of the deadline for the ongoing recapitalisation of insurance and reinsurance companies, insisting that operators must meet the stipulated capital requirements within the approved timeline. The regulator said the reform is critical to strengthening the insurance industry and enhancing its capacity to support Nigeria’s economy.

NAICOM stressed that the recapitalisation programme is aimed at building a more resilient, credible and solvent insurance sector capable of underwriting large and complex risks. According to the commission, delaying the process would undermine the objectives of the reform and weaken public confidence in the industry.

The insurance regulator explained that the new capital thresholds were introduced after extensive consultations with industry stakeholders and careful assessment of market realities. NAICOM noted that operators have had sufficient notice and time to prepare, making any request for a deadline shift unnecessary.

Under the recapitalisation framework, insurance and reinsurance firms are required to shore up their capital base to levels that reflect current economic conditions, inflationary pressures and the increasing scale of risks in the Nigerian market. NAICOM said the existing capital levels of many firms are inadequate to meet modern underwriting demands.

The commission emphasised that recapitalisation is not intended to force firms out of business but to encourage stronger balance sheets, improved risk management and better claims-paying ability. According to NAICOM, well-capitalised insurers are better positioned to protect policyholders and contribute meaningfully to economic development.

NAICOM also pointed out that Nigeria’s insurance penetration remains low compared to peer economies, partly due to weak public confidence arising from delayed claims settlement and limited capacity. Strengthening capital, the commission said, is a key step towards rebuilding trust and expanding insurance adoption.

The regulator disclosed that several insurance companies have already made progress towards meeting the new requirements through fresh equity injections, mergers, acquisitions and strategic partnerships. NAICOM said these developments indicate growing commitment within the industry to comply with the reforms.

While acknowledging that some operators face challenges due to prevailing economic conditions, NAICOM maintained that market realities make recapitalisation even more urgent. Rising inflation, exchange rate volatility and exposure to larger risks, the commission said, require insurers with stronger financial buffers.

NAICOM warned that companies that fail to meet the recapitalisation deadline would face regulatory action in line with existing laws. Such measures may include restrictions on operations, restructuring directives or loss of licence, depending on the level of non-compliance.

The commission reiterated that it would not compromise regulatory standards to accommodate firms that are unwilling or unable to meet the requirements. According to NAICOM, maintaining a weak and fragmented insurance sector would do more harm than good to the economy and policyholders.

Industry analysts note that the recapitalisation exercise could lead to consolidation within the insurance sector, with smaller or weaker firms merging to survive. While this may reduce the number of operators, analysts argue that it would result in stronger and more competitive companies.

Some stakeholders have expressed concern that recapitalisation could lead to job losses and reduced competition. However, NAICOM countered that a stable and credible insurance industry would ultimately create more sustainable jobs and attract long-term investment.

The regulator also highlighted the role of insurance in supporting critical sectors such as oil and gas, aviation, maritime, infrastructure and agriculture. Without adequate capital, NAICOM said, local insurers are unable to retain large risks, leading to capital flight through offshore reinsurance.

By strengthening domestic insurers, the commission said Nigeria could retain more premium income within the economy and reduce reliance on foreign markets. This, NAICOM added, would support foreign exchange conservation and financial stability.

NAICOM further noted that recapitalisation aligns with broader financial sector reforms aimed at improving resilience and governance. Similar exercises in the banking and pension sectors, the commission said, have strengthened those industries and enhanced their contribution to economic growth.

The commission assured stakeholders that it would continue to engage the industry throughout the implementation process. NAICOM said its doors remain open for guidance, clarification and supervisory support to ensure a smooth transition.

However, the regulator made it clear that engagement does not translate into deadline extensions. NAICOM stressed that certainty and discipline are essential for effective regulation and investor confidence.

Insurance experts have largely supported the regulator’s stance, arguing that prolonged delays would only weaken the sector further. They note that recapitalisation is long overdue, given Nigeria’s economic size and exposure to increasingly complex risks.

Policyholders have also welcomed the firm position, expressing hope that stronger insurers would lead to faster claims settlement and improved service delivery. Consumer advocates say enforcement of capital requirements is key to protecting the interests of insurance customers.

As the deadline approaches, NAICOM urged insurance companies to intensify efforts to meet the requirements. The commission advised firms to explore all legitimate options, including capital raising, mergers and restructuring.

NAICOM concluded that the recapitalisation exercise is a necessary step towards building a robust and trustworthy insurance industry. By ruling out any extension of the deadline, the regulator reaffirmed its commitment to reform and its determination to place the interests of policyholders and the economy above short-term industry discomfort.