The National Insurance Commission (NAICOM) has commended the House of Representatives for passing the Insurance Reform Bill 2024, describing it as a landmark achievement for Nigeria’s insurance sector.
The newly passed Nigeria Insurance Industry Reform Act 2024, establishes a robust regulatory framework for the insurance business, categorising insurance into life and non-life, and increasing the minimum capital requirements for different insurance categories.
The NAICOM hailed the bill as a significant step towards modernising Nigeria’s insurance sector, enhancing public confidence, and improving industry penetration.
The commission expressed optimism that once signed into law, the Act would drive competitiveness and growth within the sector.
The Act repeals several outdated legislations, including the Insurance Act, Cap 117; the Marine Insurance Act, Cap M3; the Motor Vehicle (Third Party) Insurance Act, Cap M22; the National Insurance Corporation of Nigeria Act; and the Nigerian Insurance Reinsurance Corporation Act, Cap N131. These laws, previously part of the Laws of the Federation of Nigeria, 2004, are now replaced by more comprehensive regulations.
The new law mandates that only licensed insurers and reinsurers can operate in Nigeria. Prospective insurers must apply for licensing and meet stringent suitability requirements set by NAICOM.
Additionally, the bill introduces new capital requirements for insurance businesses. Non-life insurance firms must have a minimum capital of N15 billion, while life assurance companies need N10 billion, and reinsurance firms must meet a N35 billion capital threshold.
To begin operations, new insurers must deposit 50% of the minimum capital requirement with the Central Bank of Nigeria (CBN), while existing firms must deposit 10%. Upon registration, 80% of the statutory deposit will be refunded within 60 days.
The bill also grants NAICOM the authority to revoke operating licenses if an insurer fails to meet industry standards, does not comply with capital requirements, or ceases operations for over a year.
