The National Insurance Commission and some other stakeholders in the insurance industry have said that the passage of the new Insurance Consolidated Bill by the Senate will lead to a bigger sector.
This is according to a statement by NAICOM and separate chats with stakeholders on Wednesday.
On Tuesday, the Senate approved new minimum capital requirements for insurance companies in Nigeria as part of reforms to strengthen the industry and address emerging risks.
The legislation, titled the Nigeria Insurance Industry Reform Act, 2024, repeals and replaces several existing laws governing the sector. It also introduces a risk-based regulatory framework and adjusts capital thresholds for insurance businesses.
The newly approved requirements peg the minimum capital for non-life insurance businesses at N15bn, life insurance businesses at N10bn, and reinsurance businesses at N35bn. These figures mark a significant increase from the existing requirements of N3bn, N2bn, and N10bn, respectively.
NAICOM said that the passage of the Bill has marked a significant milestone in the country’s efforts to revamp the insurance industry after nearly two decades.
The regulator said, “The Commission believes that the Bill is a game changer for Nigeria’s insurance industry and is going to have a high positive impact on the contribution of the insurance sector to the country’s GDP and economy as a whole.
By consolidating existing insurance laws, the new legislation marks a new era in the ongoing efforts to strengthen Nigeria’s insurance industry.
The Bill provides a comprehensive framework for regulating all types of insurance businesses and ensuring a more robust and effective sector.
“Passage of the Bill marks a significant triumph for Nigeria’s insurance industry, tackling the long-standing challenge of low insurance penetration in the country. The new legislation addresses the industry’s need for a more robust legal and regulatory framework, enabling it to compete favourably in the African insurance market and globally.”
The president of the Nigerian Council of Registered Insurance Brokers, Babatunde Oguntade, in a chat with The PUNCH, noted that the new Bill is a welcomed development for the insurance sector but expressed a desire to see the passed Bill before speaking more.
He said, “It is a good development that the government is making an effort in the insurance industry, but we cannot say much until we see the passed Bill.”
Former president/chairman of the council of the Chartered Insurance Institute of Nigeria, Edwin Igbiti, said, “The new capital requirement will give room for a bigger industry in terms of capitalisation; big capital will lead to higher capacity for the industry.
“Definitely, there will be mergers and acquisitions for bigger companies to emerge. Also, it will give room for more training, which means the business is meant for the serious-minded people who are capable.”
Some of the highlights of the passed Bill include risk-based supervision, which allows for the consolidation of the risk-based approach to supervision, enabling regulators to monitor and manage risks within the industry more effectively.
It also strengthened consumer protection, thus safeguarding the interests of policyholders and promoting transparency and fairness in insurance practices and an enhanced regulatory framework, providing clarity and consistency in the regulation of insurance businesses and facilitating a more efficient and effective supervisory process.