The National Insurance Commission (NAICOM) on Wednesday announced a shift in risks underwriting companies" recapitalization deadline to September 30, 2021.
The new deadline extension, which affects all insurance and reinsurance companies was contained in a circular dated June 30, 2020 with a reference number NAICOM/DPR/CIR/25-Q4/2020 signed by Mr. Pius Agboola, Director (Policy & Regulation) on behalf of the Commissioner for Insurance and titled "Segmentation of Minimum Paid-up Share Capital Requirement for Insurance Companies in Nigeria."
The industry regulator stated: " The Commission hereby extend and segment the recapitalization process into two phases as follows: a. 50% of the Minimum Paid-Up Capital for Insurance and 60% for Reinsurance shall be met by 31st December, 2020; b. Insurance Companies are required to fully comply with the approved Minimum Paid-Up Capital not later than 30th September, 2021." NAICOM attributed the new policy measure to the pandemic still.
The segmentation shows that Life insurance companies are required to raise their paid-up capital from the current N2bn to N4bn by December 31st, 2020 and N8bn by September 30th, 2021.
Similarly, General Insurance companies are to raise their capital from the current N3bn to N6bn on December 31st 2020 and N10bn by end September 20121. The composite companies are required to raise their capital from N5bn to N9bn December 2021 and N18bn by December 2021 while reinsurers are required to raise their capital from the current N10bn to N12bn by December 31st 2020 and N20bn by September 30,2021.
"Insurance Companies that failed to satisfy the required minimum paid-up capital by the end of 31st December, 2020 may be restricted on the scope of businesses they will transact" the circular warned.
NAICOM further mandated the insurance companies to fully comply with the required minimum paid-up capital by 30th September, 2021.
It would be recalled that the Commission had on May 20th, 2019 introduced a capital requirement for the industry with an initial deadline of December 2019 which was shifted to December 2020. With the impact of the COVID-19 pandemic on the industry, the deadline was again shifted.