From Adesuwa Tsan, Abuja
The Senate has passed a bill seeking to increase the capital base of risk-based insurance companies.
It, however, reduced the figures earlier proposed in the bill.
The decision followed the consideration and adoption of the recommendations of the report of a bill for an Act to repeal the Insurance Act, CAP. 127 laws of the Federal Republic, 2004; the Marine Insurance Act, 2004; the National Insurance Corporation of Nigeria Act, 2004; the Nigeria Reinsurance Corporation Act, 2004, and enact the Nigeria Insurance Industry Reform Act, 2024, to provide for a comprehensive legal legal and regulatory framework for insurance business in Nigeria and for related matters during plenary on Tuesday.
The previous provision of the bill pegged the minimum capital requirement for non-life insurance business at N25 billion, life assurance business at higher than N15 billion and reinsurance, N45 billion.
In the report by the Senate Committee on Banking, Insurance and other Financial Institutions chaired by Sen. Mikhail Adetokunbo Abiru (Lagos East), the Senate stated that “a person shall not carry on insurance business in Nigeria unless the insurer has and maintains, while carrying on that business, a minimum capital, in the case of (i) N15,000,000,000.00 (N15 billion) or (ii) risk based capital determined by the commission.
Life assurance business, the higher of (i) N10,000, 000,000,00 (N10 billion), or (ii) risk based capital determined by the commission.
(C) reinsurance business, the higher of (i) N35, 000, 000, 000.00 (N35 billion), and (ii) risk-based capital determined by the commission.
The Senate added that in determining the risk based capital required, “the commission shall take into consideration the capital for insurance risk, market risk and operational risk, and apply such capital changes on assets and liabilities as shall be determined from time to time.”
It explained that “the increase in minimum capital from the current capital of N2 billion to N10 billion (life), N3 billion to N15 billion (non life) and N10 billion to N35 billion (reinsurance) is necessitated by depreciation in the value of the currency, Finance Act 2022 which has redefined the composition of the capital, inflation, international competitiveness, AfCFTA competitiveness, capital flight due to overreliance on foreign insurance, emerging risks such as cyber insurance, insurance, consumer credit insurance, etc.”
The minimum capital is to be deposited with the Central Bank of Nigeria.
In his remarks on the report, the Deputy President of the Senate, Senator Barau Jibrin, expressed confidence that the law will help shape Nigeria’s economy for the better when House of Representatives concurs and President Bola Tinubu grants assent.
He added, “Economies change at all times. It is, therefore, incumbent on the authorities of every nation to recraft their legislation to go in tandem with contemporary realities. And this is what has been done by the passage of this legislation.
“The intent is to restructure the insurance ecosystem to accommodate contemporary happenings within our economy.
“I commend the Chairman of the Committee and, indeed, membership of the committee. They are people of outstanding pedigree who are educated and knowledgeable about the insurance industry.
“So they put in their best, and I am sure the country will benefit from it when the law is eventually passed.”