ABUJA, JULY 26, 2018 – The National Insurance Commission, NAICOM, yesterday, said that as from January 2019, insurance companies in Nigeria will be categorized into Tiers as obtained in the banking sector.
To operate in the tier-one life business segment, life companies must have minimum capital base of N6 billion against the current N2 billion, while non-life companies must have N9 billion instead of N3 billion currently required.
For the tier-two category, non-life operators must have minimum capital of N4.5 billion, while life operators must have N3 billion.
For tier-three, companies are expected to maintain the current capital base of the insurance industry, non-life firms are to maintain N3 billion; life firms to maintain N2 billion while composite firms are to maintain N5 billion.
Speaking at a media parley, in Lagos, to unveil the initiative, Commissioner for Insurance, Alhaji Mohammed Kari, said that NAICOM is not withdrawing any license, but to ensure each insurer has adequate capital to absorb the risks being taken.
Kari, who was represented by NAICOM’s Director of Supervision, Mr, Barineka Thompson, said the new capital requirement became desirable as inflation and interest rates had soared in the last 10 years, while insurers are still operating with the same capitalisation of 2007.
He said: “Interest rate has gone from single to double digit, inflation has risen over time and with many macroeconomic and institutional factors on the upward trends, yet the industry still maintained the same capitalisation in the last 10 years.”
