For nearly a year, Nigeria’s insurance industry has been consumed by one overriding objective which has been to raise sufficient capital to comply with the National Insurance Commission’s (NAICOM) July 31 recapitalisation deadline.
Over the past 11 months, insurers have launched rights issues, public offers, private placements, strategic investments and other fundraising initiatives in a race to meet the new minimum capital requirements. Many of these capital-raising exercises were filed through the Nigerian Exchange Limited (NGX), while much of the public conversation has centred on which insurers have successfully raised fresh capital, which operators are still racing to meet the new regulatory thresholds and whether the Commission would extend the deadline.
With the exercise now drawing to a close, attention is shifting beyond capital raising to a more important question: what will policyholders, businesses and the wider Nigerian public gain from a better-capitalised insurance industry?
For NAICOM, the recapitalisation programme was never intended to be an exercise in boosting balance sheets alone. The Commission has consistently maintained that stronger capital must translate into stronger insurers capable of delivering better value to customers.
Olusegun Omosehin, the commissioner for insurance and chief executive officer of NAICOM, recently reiterated that recapitalisation should ultimately improve service delivery across the industry.
According to him, a stronger capital base must result in faster claims settlement, improved consumer protection, stronger corporate governance and an insurance market that earns greater public confidence.
In line with that objective, the Commission earlier this month directed insurers to reconcile and settle all outstanding discharged claims before the recapitalisation deadline. Companies were required to provide evidence of claims settlement as part of the regulatory assessment process, reinforcing NAICOM’s focus on consumer protection alongside financial strength.
Industry consolidation expected
One of the most immediate changes expected after July 31 is a wave of consolidation within the industry.
Peter Offiong, executive director of First Insurance Broker, said the recapitalisation exercise is likely to reshape the market through mergers, acquisitions and licence rationalisation as operators position themselves for long-term sustainability.
“We expect to see some level of consolidation, some mergers and acquisitions, as well as licence rationalisation. Some insurers with composite licences may decide to retain only one line of business,” he said during a recent televised interview.
Rather than widespread business closures, Offiong believes weaker operators are more likely to combine with stronger firms or restructure their operations.
Drawing parallels with Nigeria’s banking sector consolidation, he noted that regulators appear committed to supporting viable institutions through advisory engagements that encourage mergers and acquisitions where necessary.
“We hope to see a better industry at the end of this process,” he said.
Greater underwriting capacity
Beyond industry restructuring, recapitalisation is expected to significantly improve insurers’ capacity to underwrite larger and more complex risks.
Offiong explained that the industry’s gradual transition towards a risk-based capital framework means insurers will increasingly hold capital that reflects the level of risks they assume.
He noted that while NAICOM has prescribed minimum capital thresholds, companies underwriting high-value sectors such as aviation, oil and gas, cyber risks and other specialised businesses may require significantly more capital than the regulatory minimum.
“The concept of risk-based capital is global best practice. It simply means your capital should match the level of exposure you carry. Some insurers may have met the minimum capital requirement, but because of the nature of their business, they will still need additional capital under the risk-based framework,” he explained.
According to him, stronger capital positions will enable insurers to underwrite larger risks locally rather than depending heavily on foreign reinsurers.
Higher local retention of insurance premiums
A major expectation from increased underwriting capacity is higher retention of insurance premiums within Nigeria.
Currently, substantial portions of premiums generated from large risks, particularly in oil and gas, aviation and other specialised sectors, are ceded to foreign reinsurers because of limited domestic capacity.
Offiong believes recapitalisation will gradually reverse that trend.
“As local capacity improves, insurers will be able to retain more of the premiums generated within Nigeria instead of transferring a significant portion overseas through reinsurance arrangements,” he said.
Greater premium retention, he added, could strengthen insurers’ investment capacity, improve profitability and create more resources for long-term industry growth.
Faster claims settlement
Perhaps the most visible benefit for policyholders will be improvements in claims management.
For years, delayed claims payments have contributed to low public confidence in insurance despite industry data showing that insurers consistently settle genuine claims.
According to Offiong, Nigerian insurers paid about ₦881 billion in claims last year, but customer experience has often been affected by slow processing times.
He said the recently enacted Nigerian Insurance Industry Reform Act (NIIRA) introduces stronger provisions aimed at improving claims administration.
The legislation shortens the timeline for claims settlement, promotes greater transparency and places stronger obligations on insurers to process legitimate claims promptly.
“The perception has always been that insurance companies do not pay claims, which is not true. What NIIRA seeks to do is improve the customer experience by reducing claims processing periods and ensuring greater transparency,” he said.
Expanded compulsory insurance
The reform law also broadens the scope of compulsory insurance in Nigeria.
According to Offiong, the number of mandatory insurance classes has expanded to about 11, covering activities and facilities that pose significant public liability risks.
These include insurance requirements for facilities such as filling stations, public buildings, tankers and container trucks, among others.
He explained that compulsory insurance is designed primarily to protect members of the public by ensuring compensation is available when accidents, explosions, fires or other incidents occur.
Rather than serving as an additional regulatory burden, he said the expanded compulsory insurance framework strengthens financial protection for consumers and businesses alike.
Technology to drive future growth
Beyond capital adequacy and stronger regulation, industry experts believe technology will define the next phase of Nigeria’s insurance market.
Offiong noted that better-capitalised insurers would be in a stronger position to invest in digital platforms, automate operations and develop innovative products capable of reaching underserved populations.
He said greater investment in technology would improve product distribution, enhance operational efficiency and make insurance more accessible to millions of Nigerians who currently remain uninsured.
According to him, NIIRA also places significant emphasis on digitisation, stronger governance and enhanced regulatory oversight, reforms expected to modernise the industry over the coming years.
A new phase for the industry
With only four days remaining before the exercise comes to a close, the industry’s focus is gradually moving beyond raising capital to implementation. For consumers, the success of the exercise will ultimately not be measured by how much capital insurers raised, but by whether stronger balance sheets translate into quicker claims settlement, improved customer service, greater financial protection and wider access to insurance.
According to industry analysts, if the reforms deliver on their promise, the post-recapitalisation era could mark the beginning of a stronger, more resilient and technology-driven insurance industry capable of supporting Nigeria’s broader economic development.
