NIIRA: Insurance Firms Must Comply With Minimum Capital Or Risk license Cancellation

Ebere Nwoji

It has emerged that the Insurance Industry Reform Act (NIIRA), which was recently signedinto law by President Bola Tinubu, specified new minimum capital base for insurance and reinsurance underwriting firms.

The law, it was learnt, gave operators 12 months from the date of commencement of the bill to raise the minimum capital or risk cancellation of their registration as licensed operators.

The new Act required insurance firms underwriting general business to raise their minimum capital from the current N3 billion to 25 billion.

Life underwriters were required to raise their capital from the current N2 billion to N15 billion while reinsurance firms were asked to raise their capital from N10 billion to N45 billion.

According to the new Act, the operators have just 12 months effect from the date of signing of the Act to comply.

Also, the sector’s regulator, the National Insurance Commission (NAICOM), has been authorised by the new Act to publish the names of insurance and reinsurance firms that were able to meet the capital requirement after 30 days of expiration of the deadline.

Part 5 of the Act concerning operators’ minimum capital said, “An insurer registered before the commencement of this bill shall comply with the foregoing requirement within 12 months of the commencement of this bill.

“The Commission shall cancel the registration of any insurer or reinsurer that fails to satisfy the provisions of subsection (2) of this section as it relates to the category of operation of such insurer or reinsurer; andnot later than 30 days after expiration of the period specified in subsection (4) of this section, publish a list of all insurers that have complied with the provisions of this section.”

It added, “Where the Commission considers it appropriate, having regard to the nature, size and complexity of the insurance business carried on or proposed to be carried on by an insurer, and to the insurer’s risk profile, the commission may issue a directive requiring the insurer to increase its minimum capital to an amount higher than the minimum specified in this section or the regulations made pursuant to this section; or increasing the minimum capital requirements applicable to an insurer to a higher sum than that specified in this section or the regulations made pursuant to this section.”

It further said that at the commencement of the bill insurer should deposit the equivalent of 50 per cent of the minimum capital requirement referred to in section 15 of this bill with the Central Bank of Nigeria (CBN).

It said, “Minimum capital to be deposited with the CBN.insurer intending to commence insurance business in Nigeria after theregistration as an insurer, 80 per cent of the statutory deposit shall be returned with interest not later than 60 days after registration”.

In the case of existing companies, the new law said an equivalent of 10 per cent of the minimum capital stipulated in section 15 should be deposited with the CBN.