Joy Agwunobi
The National Insurance Commission (NAICOM) has announced a ban on coinsurance arrangements between Takaful operators and conventional insurance companies, effective January 1, 2026.
The directive, contained in a circular signed by Kollere U. Ahmad, Assistant Director (Financial Inclusion), on behalf of the Commissioner for Insurance, was addressed to all licensed Takaful operators and conventional insurance firms. The circular, titled “Prohibition of Coinsurance Arrangements Between Takaful Companies and Conventional Insurance Companies,” sets out new boundaries for the Nigerian insurance market.
According to NAICOM, the decision follows a review of current market practices and is aimed at protecting the integrity of Takaful as a Shari’ah-compliant financial model, strengthening the financial soundness of the sector, and reducing systemic risks that may arise from entanglement with conventional insurers.
“Sequel to a review of current market practices and in alignment with the principles underpinning Takaful operations, there is the need to establish clear regulatory boundaries between Takaful and conventional insurance businesses,” the Commission stated.
It added that the policy is intended to halt practices that could erode public confidence or cause reputational harm to Takaful operators. The prohibition, NAICOM stressed, is anchored on its statutory powers under Section 6 of the NAICOM Act 1997, NIIRA 2025, and other extant laws governing the insurance industry.
The circular specifically directs that Takaful operators shall not engage in any coinsurance arrangement with conventional insurers, and vice versa, as such practices are inconsistent with the guiding principles of both models. However, NAICOM clarified that the ban does not extend to Retakaful arrangements with conventional reinsurance companies, which may continue until adequate Retakaful capacity is developed in the Nigerian market.
“This prohibition, which comes into effect from 1st of January 2026, is intended to preserve the integrity of each model’s underlying principles and ensure compliance with respective regulatory and ethical standards. For the avoidance of doubt, this directive does not extend to Retakaful arrangements with conventional reinsurance companies,” the Commission stated.
NAICOM further directed all operators to ensure full compliance with the new policy as the deadline approaches.
NAICOM, SEC pledge deeper synergy to drive insurance sector reforms
Nigeria’s ongoing insurance industry recapitalisation programme has gained fresh momentum as the National Insurance Commission (NAICOM) and the Securities and Exchange Commission (SEC) committed to closer collaboration aimed at deepening reforms across the financial services ecosystem.
The two regulatory agencies made this pledge during a high-level courtesy visit by Olusegun Omosehin, commissioner for insurance, to Emomotimi Agama, director-general of the SEC, at the Commission’s headquarters in Abuja.
According to a statement from NAICOM, the visit underscores its commitment to building regulatory partnerships that will not only strengthen investor confidence but also ensure the recapitalisation process is less burdensome for operators.
It follows a recent circular in which NAICOM disclosed plans to engage extensively with key government institutions, including the SEC, Corporate Affairs Commission (CAC), Federal Inland Revenue Service (FIRS) and other stakeholders, to secure necessary concessions and incentives that could ease compliance costs and streamline the recapitalisation exercise.
Agama, while welcoming the NAICOM delegation, congratulated the Commission on the successful signing of the Nigeria Insurance Industry Reform Act 2025 into law by President Bola Tinubu. He described the new legislation as “a new dawn for the insurance industry” and expressed optimism that it would drive sustainable reforms across the financial services space.
Responding, Omosehin noted that the purpose of the visit was to strengthen institutional synergy between NAICOM and SEC as both agencies play crucial roles in the broader financial market. He explained that the recapitalisation initiative, now backed by legislation, was designed to reposition the insurance industry on a stronger footing.
“The ongoing recapitalisation of the insurance industry is aimed at transforming the sector and strengthening institutions, which is now a legislative mandate rather than an option,” Omosehin said, emphasising that the exercise was structured to enhance service delivery and build greater resilience in the market.
On his part, the SEC director-general assured NAICOM of the Commission’s unwavering support, pledging to deploy its expertise and regulatory guidance to help deepen growth within the insurance sector. He urged NAICOM to see the SEC as a strategic partner, noting that the recapitalisation journey required close collaboration among regulators to deliver the intended outcomes.
Agama also highlighted the SEC’s transition into a fully digitalised operation, stressing that technology adoption was critical for efficiency, transparency, and sustainable transformation in the insurance industry. He encouraged operators under NAICOM’s supervision to accelerate their digitalisation drive, which he said would boost competitiveness and improve consumer confidence.
Delivering a vote of thanks, Usman Jankara, NAICOM’s deputy commissioner for insurance (Technical), commended the SEC leadership for its willingness to support the insurance industry through technical advice and policy guidance. He emphasised that a collaborative approach between regulators would go a long way in fortifying Nigeria’s financial ecosystem and ensuring the success of the ongoing reform agenda.
The renewed partnership between NAICOM and SEC comes at a pivotal moment for the insurance sector, which has long struggled with low penetration, undercapitalisation, and public trust deficits.
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