Increase in the minimum capital of insurance companies in Nigeria

The National Insurance Commission (NAICOM) has introduced a new capital threshold in order to carry out the insurance industry in Nigeria.

The new capitalization system consists of risk-based supervision model. It imposes a specific capital for each class or for each set of classes of business:

  • Life insurers:
    • Category 1 (high risk): they will henceforth need to have a capital of 6 billion NGN (16.56 million USD) compared to the current capital of 2 billion NGN (5.52 million USD).
    • Category 2 (medium risk)): the capital will have to be increased from 2 billion NGN (5.52 million USD) up to 3 billion NGN (8.28 million USD).
    • Category 3 (low risk): the capital remains unchanged at 2 billion NGN (5.52 million USD).
  • Non life insurers:
    • Category 1 (covering oil and gas risks): companies will have to raise their capital from 3 billion NGN (8.28 million USD) to 9 billion NGN (24.84 million USD).
    • Category 2 (providing engineering and marine guarantees): insurers will be forced to increase their capital to 4.5 billion NGN (12.42 million USD).
    • Category 3 (motor, fire…): the capital remains unchanged at 3 billion NGN (8.28 million USD).
  • Composite insurance firms underwriting both life and non-life businesses:
    • Category 1: the capital will increase from 5 to 15 billion NGN (from 13.8 to 41.4 million USD).
    • Category 2: the capital will increase from 5 to 7.5 billion NGN (from 13.8 to 20.7 million USD).
    • Category 3: the capital remains unchanged at 5 billion NGN (13.8 million USD).

January 1, 2019 is the deadline set for insurance companies to comply with this new requirement.

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