The Nigerian Senate has proposed updated minimum capital requirements for insurance companies in the country as part of efforts to fortify the industry against emerging risks. The new legislation, known as the Nigeria Insurance Industry Reform Act, 2024, aims to replace and repeal existing laws governing the sector. It introduces a risk-based regulatory framework and adjusts capital thresholds for insurance entities. The revised minimum capital requirements set the bar at N15 billion for non-life insurance, N10 billion for life insurance, and N35 billion for reinsurance businesses. These figures represent a significant increase from the previous requirements. The bill, put forward by the Senate Committee on Banking, Insurance, and Other Financial Institutions, chaired by Senator Adetokunbo Abiru, incorporates additional risk-based capital requirements to address insurance, market, and operational risks. The Senate attributed the adjustments to factors such as inflation, currency depreciation, the need for enhanced international competitiveness, and emerging risks like cyber insurance and consumer credit insurance. The legislation mandates that the minimum capital must be held with the Central Bank of Nigeria, aiming to strengthen the industry, reduce dependence on foreign insurers, prevent capital flight, and bolster Nigeria’s position in the African Continental Free Trade Agreement. The Senate emphasized that the new measures are crucial for protecting policyholders and ensuring the resilience of the insurance sector in a rapidly changing global market.
Senate proposes new capital requirements for insurance firms
