Nigerian insurers’ new capital regime takes off October 1, says NAICOM

Nigeria’s insurance industry new capital structure takes off October 1, 2018, according to the regulatory authority, the National Insurance Commission (NAICOM).

NAICOM confirmed the new takeoff date for the newly introduced tier-based minimum solvency capital (TBMSC) to business a.m. on telephone Wednesday morning.

The confirmation thus reduced by three months the time earlier stipulated for insurance firms to beef up capital towards playing in desired tiers.

While the TBMSC gives only a handful of operators a clean bill of health, majority of the others may have recourse to mergers and acquisition for them to operate in the increasingly competitive terrain.

business a.m. learnt that the rationale behind bringing the date forward was premised on the fact that the policy has been ongoing for quite a period of time, and that the guidelines released Monday were to show operators the policy direction.

“It’s true that we have brought the guidelines and date for implementation to October 1, the guidelines are just to show the policy direction and how the operators are to function,” Rasaaq Salami NAICOM’s head corporate communications told business a.m.

The TBMSC structure is a three-tier initiative, which requires insurance firms to be categorized in three categories in terms of capital bases: Tier 3 – Base Capital (existing minimum paid up capital of N2 billion for life insurers, N3 billion for non-life insurers, and N5 billion for composite insurers); Tier 2 – 50 percent additional on the base capital; and Tier 1 – 200 percent additional on the base capital.

However, a minimum N10 billion for re-insurance companies was left same for all tiers.