The National Insurance Commission (NAICOM) has issued a stern warning to insurance and reinsurance companies in Nigeria, stressing that any operator that fails to meet the newly mandated recapitalisation deadline of July 2026 will face strict regulatory action, including forced mergers or outright liquidation.
The directive follows the enactment of the Nigerian Insurance Industry Reform Act 2025, which introduces new Minimum Capital Requirements (MCR) for players in the industry. Under the law, life insurance firms are required to increase their capital base to N10 billion, non-life insurance firms to N15 billion, while reinsurance companies must raise theirs to N35 billion.
In a circular signed by NAICOM’s Deputy Commissioner (Technical), Dr. Usman Jankara, the regulator made clear that it would not hesitate to take firm action against any company that fails to comply within the stipulated timeframe. “Any company that fails to meet the prescribed MCR within the stipulated timeframe shall be subject to liquidation, merger, or any other regulatory resolution action deemed appropriate by the Commission,” the circular stated.
According to the commission, successful insurers and reinsurers that meet the new requirements, pay the requisite fees, and receive confirmation from NAICOM will be issued fresh licences to continue operations. The 12-month compliance window takes effect from July 31, 2025 the date the President assented to the reform law giving companies until July 2026 to align with the new standards.
NAICOM also announced that it will issue detailed guidelines to clarify the recapitalisation process. These will cover the components of the MCR, acceptable forms of capital, and procedures for verifying compliance. The guidelines will also specify prudential standards to prevent the use of weak or encumbered assets in meeting the capital thresholds.
Dr. Jankara emphasised that assets with incomplete or defective ownership titles, encumbered assets, or those not fully in the possession of insurers will not be recognised for recapitalisation purposes. Similarly, assets that exceed regulatory thresholds or do not meet prudential requirements will be deemed inadmissible. This, he explained, is to ensure that only genuine and verifiable assets are deployed for the recapitalisation exercise.
To ease compliance, NAICOM revealed it is engaging with other regulatory bodies to explore incentives and concessions that may help insurers meet the new capital benchmarks without undue financial strain. However, the commission stressed that operators must take immediate steps to prepare internally, develop recapitalisation strategies, and begin execution without delay.
“The commission is determined to strengthen Nigeria’s insurance industry through strict enforcement of these new capital requirements,” Jankara said. “Companies must not wait until the deadline is close before acting. Early preparation will be key to ensuring compliance and business continuity.”
NAICOM’s directive is intended to strengthen the financial resilience of the insurance industry, improve its ability to underwrite bigger risks, and promote greater market stability. However, firms that fail to meet the recapitalisation deadline risk severe sanctions, including forced mergers, acquisitions, or liquidation.
