Insurance: Recapitalisation Not Enough Without Technical Capacity, Stakeholders Warn

Stakeholders in Nigeria’s insurance industry have cautioned that ongoing recapitalisation efforts under the new regulatory framework will not be sufficient to reposition the sector unless operators also significantly strengthen technical capacity, underwriting expertise, and risk management systems.

This position was reinforced ahead of the July 3, 2026 investiture of the incoming first female chairman of the Nigerian Insurers Association, Ebelechukwu Nwachukwu, who outlined a reform-focused agenda centred on collaboration, improved public understanding of insurance, and stronger compliance support as the industry adjusts to the provisions of the Nigeria Insurance Industry Reform Act 2025.

Nwachukwu said the reform law, which introduces Risk-Based Capital requirements and higher minimum capital thresholds, presents an opportunity to reposition insurance as a mass-market financial service rather than a niche product.

However, she stressed that capital strength alone would not deliver the transformation the industry needs.

“Recapitalisation will strengthen balance sheets, but without the technical expertise to manage larger and more complex risks, the sector will not achieve sustainable growth,” she said.

She outlined three key priorities for her tenure: expanding insurance distribution through partnerships with banks, fintechs, and microfinance institutions; simplifying insurance language and claims processes to rebuild public trust; and working closely with regulators to ensure smooth implementation of the new Act.

According to her, strategic alliances with financial institutions would help deepen penetration, especially through digital channels, while improving accessibility for underserved segments of the market.

Nwachukwu also emphasised the need to rebuild trust in the industry, noting that poor understanding of insurance products and complex policy documentation continue to limit adoption in Nigeria.

She pledged stronger engagement with insurance agents and brokers, including improved training, professional development, and retention frameworks to enhance professionalism across the distribution chain.

Stakeholders at the pre-investiture engagement echoed concerns over weak technical capacity, warning that many operators would struggle to retain more risk domestically without urgent investment in underwriting skills, actuarial capacity, and investment management.

In response, industry leaders, including the managing director and chief executive officer of Coronation Insurance Plc and member of the governing council of the NIA, Olamide Olajolo, said insurers must prioritise technical development alongside capital accumulation.

He noted that stronger capital positions should enable firms to retain more risk within Nigeria rather than ceding it to foreign reinsurers, but cautioned that this would only be possible with improved expertise in risk assessment and portfolio management.

“The focus is not just recapitalisation. We must build the technical capabilities needed to manage larger risks and deliver sustainable returns,” he said.

Olajolo added that industry-wide partnerships with international insurance institutions were being explored to strengthen underwriting, investment management, and professional training standards.

On the growing concern around declining interest in annuity products, Nwachukwu said the association would engage the National Pension Commission (PenCom) and other stakeholders to restore confidence in the segment.

The honorary treasurer of the Nigerian Insurers Association, Babatunde Fajemirokun, noted that annuity funds remain tightly regulated, with safeguards including pension custodian oversight, actuarial reviews, monthly reporting requirements, and strict asset-liability management frameworks.

He added that claims payment remains a key driver of confidence in the industry, disclosing that insurers paid about N747 billion in claims last year while continuing to strengthen compliance and market conduct standards.

As the industry prepares for a new leadership era under its first female chairman, stakeholders said the success of the reform agenda would depend not only on capital mobilisation but also on how effectively insurers build the technical depth required to manage a more complex and expanded risk environment.