The dispute between the National Insurance Commission (NAICOM), NICON Insurance and Nigeria Reinsurance Corporation should be viewed separately from the question of whether the companies raised the required recapitalisation funds, according to Isolac & Associates, an insurance, training and advisory firm.
The firm said the controversy has brought together two distinct questions: whether the companies funded their recapitalisation in accordance with the admissibility requirements under the Nigerian Insurance Industry Reform Act (NIIRA) 2025 and NAICOM’s Minimum Capital Requirement (MCR) Guidelines, and whether the conditions imposed by the regulator for verifying the funds were properly applied.
Isolac & Associates, which focuses on deepening knowledge and skills in insurance and employee benefits as part of the wider financial ecosystem, made the assessment in response to Business A.M.’s request for its view on the dispute.
According to the firm, NICON and Nigeria Re would need to provide documentary evidence that the capital they raised met the applicable admissibility requirements, stressing that the amount of money raised was only one part of the regulatory process.
It said the funds would also have to be verified and confirmed by NAICOM, or its appointed consultants or agents, before they could be regarded as admissible capital under the new framework.
“Funding of the new capital thresholds in naira figure is necessary but needed to be verified and confirmed either by NAICOM directly and/or through its appointed consultants or agents,” the firm said.
Isolac argued that this distinction was important in understanding NAICOM’s position in the dispute, noting that money placed in a term deposit but not yet subjected to regulatory verification may not necessarily be the same as verified and admissible regulatory capital.
The firm said the verification process was intended to establish that the funds were real, unencumbered and admissible under the applicable rules.
Escrow requirement
On the separate dispute over the reported requirement that the companies place their entire new core capital in an escrow arrangement with the Central Bank of Nigeria, Isolac said the basis for the directive should be established from the relevant regulatory documents.
It said NICON and Nigeria Re should make available the documents showing the administrative instruction from NAICOM requiring them to deposit 100 per cent of the new core capital, particularly in view of their reliance on the 10 per cent deposit provision in Section 16(3) of NIIRA 2025.
According to the firm, the question of whether the escrow requirement was properly imposed should not be confused with whether the companies raised the required capital.
Isolac said the outcome of that question could have implications beyond the two companies involved because of the wider application of the new capital regime.
Ibrahim’s previous opposition
The firm also weighed in on the relevance of Senator Jimoh Ibrahim’s opposition to the higher reinsurance capital requirement during the 2024 legislative process.
Isolac said the position provides “narrative context” to the present dispute but does not provide a legal basis for determining the companies’ current compliance or the merits of their objections to the regulator.
According to the firm, opposing a proposed legislative provision before its enactment should not in itself be interpreted as evidence of bad faith when the same provision is subsequently challenged on questions concerning its implementation.
It noted that once the legislation was enacted, its provisions became binding on insurance and reinsurance companies under NAICOM’s regulatory jurisdiction.
Concern over regulatory intervention
Isolac & Associates also raised concerns about the Federal Ministry of Finance’s intervention in the dispute, arguing that the manner in which the matter was handled could raise questions about regulatory independence and equal treatment.
The firm said companies that believe a regulator has exceeded its authority ordinarily have recourse through the courts or the regulator’s internal processes, noting that NICON and Nigeria Re had also approached the courts over the dispute.
“The ordinary channel for a company that believes a regulator has overreached is the courts … or NAICOM’s internal process,” Isolac said.
It said its concern was not that the two companies petitioned the Federal Government, noting that any company had the right to seek government intervention, but that the petition resulted in an executive directive suspending enforcement against the two companies while the same requirements had been applied to other operators.
According to the firm, the fact that the intervention occurred while the matter was already before the courts further heightened the concern.
Isolac said the development could create the perception of unequal treatment, particularly if companies with stronger connections to government could secure executive intervention in disputes that other operators would have to pursue through judicial or regulatory channels.
“Even if NAICOM’s fees ultimately prove legally shaky, the mechanism of relief matters,” the firm said, arguing that the way the matter is resolved could affect the regulator’s credibility and deepen the trust deficit between the public and the insurance industry.
The firm maintained that its concern was therefore not necessarily about the merits of NICON and Nigeria Re’s objections, but about ensuring that the process for resolving regulatory disputes remains consistent and available to all operators.
UN appointment raises sensitivity
Isolac also said Senator Ibrahim’s current position as Nigeria’s Permanent Representative to the United Nations adds sensitivity to the dispute because of his reported links to the two companies.
However, the firm cautioned against drawing a definitive conclusion about conflict of interest without first establishing Ibrahim’s current ownership, control or beneficial interest in NICON and Nigeria Re, particularly in light of the companies’ previous history involving the Asset Management Corporation of Nigeria.
It also noted that the Permanent Representative to the UN does not exercise line authority over the Federal Ministry of Finance or NAICOM.
The consultancy said the concern was therefore more about the appearance of government involvement in a dispute involving companies linked to a presidential appointee than a direct case of an official regulating his own company.
Uniformity key to outcome
For Isolac & Associates, the most important issue arising from the dispute is how the government and the courts ultimately resolve questions surrounding the disputed regulatory requirements.
The firm said any decision on the 1 per cent capital injection fee and the scope of the escrow requirement should apply uniformly to insurance and reinsurance companies that have met the new capital thresholds.
“The major issue here is uniformity,” it said.
According to the consultancy, a generally applicable decision could provide clarity on the limits of NAICOM’s authority and strengthen the implementation of NIIRA 2025, while a resolution that applies selectively could create uncertainty for other operators.
Isolac said the manner in which the dispute is resolved could therefore establish an important precedent for future regulatory disagreements in the insurance industry.
It argued that the outcome should ultimately reinforce the broader objectives of NIIRA 2025, which it said should go beyond increasing insurers’ capital and premium generation to improving risk underwriting, claims management and the quality of outcomes for policyholders.
The firm said the present controversy follows a broader pattern in which efforts to reform Nigeria’s insurance industry have faced resistance through litigation, public opposition or political pressure, making the handling of the NICON and Nigeria Re dispute particularly important to the credibility of the new regulatory framework.
