The regulator for the Nigerian insurance sector, National Insurance Commission (NAICOM) has increased the minimum paid-up capital of insurance companies by over 200% in a circular released on May 20 2019.
The new guidelines are coming after NAICOM’s failure in its initial bid to shore up the minimum operating capital of insurance firms through its Tier Base Minimum Solvency Capital.
In the new capital base, Life insurance companies will now have a minimum paid-up capital of N8 billion from its previous minimum capital which was N2 billion, General Insurance companies will now have to recapitalize to N10 billion from the previous N3 billion, while Composite Insurance companies will now need N18 billion to underwrite businesses from the previous N5 billion minimum capital.The new capital base requirement also affects reinsurance companies who will now have to raise their minimum paid-up capital from N10 billion to N20 billion if they must remain in business.
The circular provides that the new minimum paid-up share capital requirements shall take effect immediately for new applications while existing insurance and reinsurance companies shall be required to fully comply not later than June 30, 2020.
However, the new capital base doesn’t apply to micro-insurance and Takaful insurance companies.