The National Insurance Commission (NAICOM), has issued a strong warning to insurers and reinsurers in Nigeria, declaring that companies failing to meet the July 2026 recapitalisation deadline will face strict regulatory sanctions, including forced mergers or outright liquidation.
This directive follows the recent passage of the Nigerian Insurance Industry Reform Act (NIIRA) 2025, which introduced sweeping changes to strengthen the sector, boost investor confidence, and protect policyholders.
Under the new law, life insurance companies are required to increase their minimum capital to ₦10 billion, non-life insurers to ₦15 billion, while reinsurance firms must raise capital to ₦35 billion.
Deputy Commissioner (Technical), Dr Usman Jankara, stressed in a circular that compliance is non-negotiable.
“Any company that fails to meet the prescribed Minimum Capital Requirement (MCR) within the stipulated timeframe shall be subject to liquidation, merger, or any other regulatory resolution action deemed appropriate by the Commission,” Jankara stated.
Successful firms that meet the recapitalisation target and pay the requisite fees will be issued fresh operating licences by NAICOM.
The law, which received Presidential assent on July 31, 2025, gives insurers 12 months to adjust their capital structure. NAICOM confirmed that the countdown has already begun.
In preparation, the Commission will release detailed guidelines covering:
Acceptable forms of capital (cash, retained earnings, verified assets).
Procedures for capital verification.
Composition and admissibility of assets.
Notably, assets that are encumbered, lack perfected ownership titles, or fall short of prudential standards will not be recognised in meeting the new requirements.
The recapitalisation drive is part of NAICOM’s wider effort to reposition the insurance industry, which has long struggled with low penetration rates, weak capitalisation, and poor claims settlement.
Nigeria’s insurance penetration currently stands at less than 1% of GDP, compared to South Africa’s 17% and Kenya’s 3%, according to industry data.
Analysts argue that raising capital thresholds will create stronger and more competitive players capable of underwriting big-ticket risks in oil, gas, aviation, and infrastructure.
To ease the transition, NAICOM has promised to engage other regulators, such as the Central Bank of Nigeria (CBN) and the Federal Inland Revenue Service (FIRS), to secure tax incentives, concessions, and flexible financing options that may reduce the cost of compliance.
While larger firms are expected to meet the requirements comfortably, smaller operators have expressed concerns about the short compliance window. Some fear that forced mergers could reduce market diversity.
Speaking to journalists, Dr Chijioke Eze, an insurance analyst in Lagos, said:
“The recapitalisation is long overdue, but NAICOM must also support smaller firms to avoid a scenario where only a handful of big companies dominate. Consolidation should strengthen, not stifle, the industry.”
Policyholders, however, welcome the move, insisting that stronger companies mean better service delivery and faster claims settlement.
The recapitalisation programme is widely regarded as the boldest reform in the Nigerian insurance industry in over a decade. If fully implemented, it could transform the sector into a more trusted pillar of Nigeria’s financial services landscape.
With the July 2026 deadline looming, NAICOM has made it clear: insurance companies must recapitalise or risk losing their licences.