Insurance companies under the auspices of the Nigerian Insurers Association (NIA) have agreed to the N10 billion capital base for life insurance, N15 billion for non-life and N35 billion for Reinsurance businesses in the country as included in the Nigerian Insurance Industry Reform Bill that is on the verge of being passed into law.
The Nigerian Insurance Industry Reform Bill 2024 is a significant piece of legislation aimed at overhauling the regulatory framework of the insurance sector in Nigeria.
The existing Insurance Act of 2003 is outdated and does not adequately address the current realities and evolving needs of the Nigerian insurance market while the reform bill is regarded as a timely and necessary step to bring the legal framework in line with contemporary challenges and international best practices.
Speaking on this development at a media parley in Lagos recently, the chairman of NIA, Kunle Ahmed said, the proposed significant increase in the minimum capital requirements for insurance companies (non-life: N15 billion, Life: N10 billion, Reinsurance:N35 billion) will enhance the financial capacity of insurers to underwrite larger risks, improve their solvency, and increased public confidence in their ability to meet obligations.
He stressed that it aims to improve the industry’s retention capacity and reduce reliance on foreign reinsurance.
“My reaction to this bill is largely positive, as it appears to address several long-standing issues and aims to modernize and strengthen the industry for the benefit of all stakeholders,” he stressed,
Stating that the bill emphasises a shift towards risk-based supervision, which is a more sophisticated and effective approach to regulation, he added that this will allow the National Insurance Commission (NAICOM) to better monitor and manage risks within the industry, ensuring stability and protecting policyholders’ interests.
“One key objective of the bill is to strengthen the protection of policyholders. This is vital for building trust in the insurance sector and encouraging greater participation from the public. Specific provisions for consumer protection will be crucial in achieving this.
“The bill introduces stricter licensing requirements for insurance operators, directors, and management, ensuring that only fit and proper persons are allowed to operate in the industry. This will help in maintaining professionalism and ethical standards,” he pointed out.
A stronger and more capitalised insurance industry, operating under a modern regulatory framework (the NAICOM Act is also currently being reviewed), he said, has a greater potential to contribute significantly to Nigeria’s GDP and overall economic development.
To him, “The bill is now awaiting presidential assent to become law. NAICOM and industry stakeholders have expressed optimism that the President will sign the bill into law, and once enacted, the Nigerian Insurance Industry Reform Act 2024 is expected to have profound implications for the industry.”
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