NAICOM Raises Insurance Firms’ Capital Requirements by 400%
The National Insurance Commission (NAICOM) has increased the minimum capital requirement for insurance companies in Nigeria by up to 400 per cent, in a move aimed at ensuring the industry’s resilience and ability to absorb risks.
The adjustment, contained in the Nigerian Insurance Industry Reform Act 2025, raises the capital base for non-life insurers to N15 billion from N3 billion, and for life insurance firms to N10 billion from N2 billion. Reinsurance companies face the steepest requirement at N35 billion, up from N10 billion — a 250 per cent increase.
“A person shall not carry on insurance business in Nigeria unless the insurer has and maintains, while carrying on that business, a minimum capital, in the case of non-life insurance business, the higher of N15,000,000,000, or risk-based capital determined by the commission,” the Act said.
It further states: “Life assurance business, the higher of N10,000,000,000, or risk-based capital determined by the commission. Reinsurance business, the higher of N35,000,000,000, or risk-based capital determined by the commission.”
NAICOM explained that the “risk-based capital” will factor in “insurance risk, market risk, credit risk and operational risk” and apply “capital charges on assets and liabilities” to safeguard policyholders and financial stability.
The Act defines “capital charge” as “the proportion of capital required to take care of the potential deterioration of the economic value of an asset and the uncertainty in estimating liability due to the occurrence of an adverse event.”
For new insurers, capital may be held in government bonds, treasury bills, or cash equivalents, while existing firms can meet the requirement through admissible assets over liabilities, approved subordinated liabilities, or other instruments.
Companies already in operation have 12 months to comply with the new thresholds.
