Bleak Outlook For Insurance Investors and Policyholders
OpenLife News reports that insurance investors, insured and policyholders may have to wait longer for returns despite the industry’s new capital base of N1.079 trillion, as insurance firms struggle to access about N300 billion raised during the just concluded recapitalisation exercise.
The funds are currently trapped in the Central Bank of Nigeria, CBN, pending verification for illicit inflows.
Insurance Industry sources said the apex bank imposed a stricter capital verification regime over suspicion of illicit sources of some of the new investments, a hurdle most insurers have found difficult to scale.
The National Insurance Commission, NAICOM, has reportedly given approval for the CBN to release the funds, but affected firms are still painstakingly going through the verification process.
Chairman of the Nigerian Insurers Association, NIA, Mrs. Ebelechukwu Nwachukwu, disclosed this during a virtual press briefing on the outcome of the Insurers Committee meeting, stating that the regulator has done its part while operators are working to meet CBN’s criteria to access the funds on or before the end of this month.
Bleak Outlook For Investors and Policyholders
The delay has dashed earlier expectations. Insurers had planned to deploy the new capital in the third quarter of this year to boost financial performance and reward investors with good dividends in fiscal 2026 for their support during the recapitalisation.
That expectation is now bleak. With funds still locked in escrow, operators cannot invest the capital to generate returns, raising fears that investors may not receive dividends in 2026 despite committing fresh funds.
For insured and policyholders, the implication is also worrying. The trapped capital was expected to strengthen underwriting capacity, improve claims payment and support new product development.
The continued lock-up means limited capacity expansion and slower claims settlement in the near term.
Various reports imply that 24 insurance companies cumulatively raised N300 billion during the exercise.
Added to over N700 billion existing capital, the total industry capital rose to N1.079 trillion post-recapitalisation.
The Nigerian Insurance Industry Reform Act, NIIRA 2025, stipulates that underwriters and reinsurers who participated in the exercise that ended on July 31, 2026, must keep their recapitalised funds in an escrow account with the CBN.
Of the 50 firms that scaled the hurdle, 24 raised fresh capital while 26 had already surpassed the minimum benchmark before the exercise.
NIIRA had mandated life underwriters to recapitalise from N2 billion to N10 billion, non-life from N3 billion to N15 billion, while reinsurers were required to upgrade from N10 billion to N35 billion.
Commissioner for Insurance and CEO of NAICOM, Mr. Olusegun Omosehin, had disclosed that industry capital has now risen to N1.079 trillion from about N700 billion before the exercise.
He said NAICOM will allow operators access to the funds but will closely monitor them to ensure the funds are not mismanaged or diverted.
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