NAICOM Ties Underwriting  of FG Business to Bond Participation

Ebere Nwoji

The National Insurance Commission(NAICOM), has introduced a new twist in insurance of government assets as it  mandates all insurance firms gunning for government business underwriting to  participate in insurance bonds business.

THISDAY gathered that this initiative was driven by the need to address the significant issue of abandoned government projects across the country.

It was learnt that in 2021 there were nearly 12,000 abandoned federal and state governments projects, which would require an estimated N7.78 trillion to complete.

To guard against this, NAICOM resorted to the use of bonds as  surety to cover the costs if a contractor fails to perform the work or pay its laborers and suppliers.

At the 20th Insurers’ committee meeting, NAICOM advised operators to strengthen their involvement in  government bonds business, a key financial guarantee used to secure public contracts.

The insurers were informed that  underwriters  without evidence of participating in bond business might  no longer be eligible to secure insurance contracts from government institutions.

Addressing journalists after the meeting, Chairperson of the Communication and Stakeholders Engagement Sub-Committee of the Insurers’ Committee,  Mrs Ebelechukwu Nwachukwu said the policy was part of a broader effort to encourage insurers to take up greater responsibility in supporting government-backed infrastructure and development projects.

She explained that government bond instruments, which served as financial guarantees for contractors executing public projects, were critical to ensuring accountability and protecting public funds.

According to her, the industry has now confirmed that insurers will need to provide proof that they actively underwrite government bond business before they can participate in public sector insurance contracts. The move, she noted, was designed to deepen market capacity in the bond segment while ensuring insurers contribute more directly to national economic development through risk guarantees for infrastructure and commercial activities.

THISDAY checks revealed hat the practice of requiring insurance companies to participate in underwriting government risks, often through bonds, is a well-established mechanism used by governments worldwide to manage financial exposure and ensure project completion. This participation is frequently mandated by law or regulation to secure public interests.