Finance ministry suspends N680m NAICOM fees on two insurers

The Federal Ministry of Finance has ordered the National Insurance Commission (NAICOM) to suspend enforcement of N680 million in recapitalisation-related fees imposed on NICON Insurance Limited and Nigeria Reinsurance Corporation, raising fresh questions over the implementation of Nigeria’s new insurance capital requirements.

The ministry also directed NAICOM to provide the legal justification for the disputed charges and other regulatory directives issued to the two insurers, pending the determination of a petition filed by the companies.

The intervention came after NICON Insurance and Nigeria Re challenged NAICOM’s assessment of a 1 per cent capital injection fee, alongside additional processing and verification charges under the commission’s Minimum Capital Requirement Guidelines.

NAICOM assessed N305 million against NICON Insurance and N375 million against Nigeria Re, bringing the total disputed charges to N680 million.

The companies have also challenged NAICOM’s directive requiring existing insurance operators to transfer their entire recapitalisation funds into an escrow account with the Central Bank of Nigeria (CBN), arguing that the requirement goes beyond the statutory provision under the Nigerian Insurance Industry Reform Act (NIIRA) 2025.

The Finance Ministry’s directive was contained in a letter dated August 6, 2026, signed by the Permanent Secretary, Raymond Omachi, on behalf of the Minister of Finance and Coordinating Minister of the Economy.

The ministry said it received a petition dated July 27, 2026, from the two companies challenging NAICOM’s implementation of the recapitalisation requirements.

According to the ministry, the insurers maintained that they had complied with the statutory July 31, 2026 recapitalisation deadline, having injected a combined N50 billion into their businesses.

NICON Insurance injected N20 billion, while Nigeria Re injected N30 billion through Mudaraba Term Deposit accounts with Lotus Bank Limited.

The companies said the amounts exceeded their adjusted capital requirements of N16 billion for NICON and N28 billion for Nigeria Re.

They also told the ministry that they had deposited N2.5 billion and N3.5 billion, respectively, with the CBN in accordance with Section 16(3) of NIIRA 2025.

The insurers argued that the law requires only a 10 per cent statutory deposit with the CBN, rather than the transfer of their entire recapitalisation funds into an escrow account.

The ministry consequently asked NAICOM to provide a detailed response and legal justification for the disputed measures.

“Pending the determination of the petition, the Commission should suspend the enforcement of the contested processing fees, 1% capital injection fee demands, and full-capital escrow transfer directives against NICON Insurance Limited and Nigeria Reinsurance Corporation,” the ministry stated.

NICON Insurance had already paid N80 million, while Nigeria Re had paid N75 million towards the disputed charges before the ministry intervened.

The dispute comes at a critical stage of the insurance industry’s recapitalisation exercise, which was introduced under NIIRA 2025 to strengthen the financial capacity of insurance and reinsurance companies and improve their ability to underwrite larger risks.

NAICOM recently announced that 43 insurance and reinsurance companies had successfully met the new minimum capital requirements, while eight others remained under final verification.

NICON Insurance and Nigeria Re did not appear on either list.

The development has heightened the significance of the companies’ petition, particularly as both firms maintain that they met the statutory deadline through substantial capital injections.

The regulatory dispute has also deepened in the case of Nigeria Re, whose operating licence NAICOM revoked over alleged failure to meet the statutory minimum capital requirement. The regulator subsequently froze the company’s bank accounts and appointed Dr Muiz Banire (SAN) as Receiver and Provisional Liquidator.

The Finance Ministry’s intervention now places the implementation of the new capital regime under closer scrutiny, particularly regarding the legal basis for additional fees and the treatment of capital injected by existing operators.

For the insurance industry, the outcome could have implications beyond the two companies, especially if questions over recapitalisation fees, statutory deposits and escrow requirements are raised by other operators.

The immediate issue, however, is whether NAICOM can legally sustain the N680 million charges and its demand for the full transfer of recapitalisation funds into a CBN escrow account, after the two insurers injected N50 billion to meet the new capital requirements.

The ministry’s suspension of enforcement means NAICOM must now justify the disputed measures before further action can be taken against the two companies.