The directive, issued by the National Insurance Commission (NAICOM), follows the signing of the Insurance Industry Reform Act by President Bola Ahmed Tinubu earlier this month. The legislation aims to strengthen insurers’ risk-bearing capacity, improve claims settlement, and bolster investor confidence in the sector.
Under the new framework, non-life insurers must raise their capital from ₦3 billion to ₦15 billion, life insurers from ₦2 billion to ₦10 billion, and reinsurers from ₦10 billion to ₦35 billion. NAICOM says the reform will enable insurers to take on larger risks and provide the stability needed for economic growth.
“This recapitalization, combined with compulsory insurance enforcement, means stronger balance sheets, better claims-paying ability, and more trust from the public,” said Ikeoluwa Alabi, an analyst at Afrinvest West Africa.
The announcement sparked a rally in insurance stocks, with a sector index on the Nigerian Exchange (NGX) closing nearly 8% higher, even as the broader All-Share Index slipped 0.1%.
The capital hike is part of Tinubu’s broader economic reform agenda, which includes raising bank capital requirements, relaxing currency controls, scrapping fuel subsidies, and restructuring taxes—moves aimed at growing Nigeria’s economy from $243 billion to $1 trillion by 2030.
To oversee implementation, NAICOM has set up an 11-member committee to verify funding sources and ensure compliance. The reform, expected to trigger mergers and acquisitions among smaller firms, marks the first adjustment to capital thresholds since 2007 and introduces a risk-based capital model, aligning Nigeria’s insurance industry with global standards.
