*The Federal Ministry of Finance directs the National Insurance Commission to stop the enforcement of disputed recapitalisation fees and directives, following a petition from NICON Insurance Limited and Nigeria Reinsurance Corporation regarding the ongoing recapitalisation exercise under the Nigerian Insurance Industry Reform Act, 2025
Gbenga Kayode | ConsumerConnect
The Nigerian Government, through the Federal Ministry of Finance, has directed the National Insurance Commission (NAICOM) to suspend the enforcement of disputed recapitalisation fees, and directives requiring two state-owned insurance companies to transfer their entire fresh capital into an escrow account with the Central Bank of Nigeria (CBN).
The Ministry of Finance specifically, demanded a detailed response and legal justification from NAICOM over the assessment of N305 million against NICON Insurance Limited and N375 million against the Nigeria Reinsurance Corporation as part of the ongoing recapitalisation exercise in the economy.
The latest intervention is coming as the Federal Government pushes insurance companies to strengthen their capital base under the ongoing industry recapitalisation programme.
The government’s directive was contained in a letter dated Thursday, August 6, 2026, which Raymond Omachi, Permanent Secretary in Finance, signed on behalf of Mr. Taiwo Oyedele, Honourable Minister for Finance and Coordinating Minister of the Economy.
The letter, addressed to the Commissioner for Insurance, NAICOM, was sequel to a petition earlier dated July 27, 2026, and submitted by NICON and Nigeria Re over the implementation of the Nigerian Insurance Industry Reform Act, 2025.
The petitioners’ concerns over NAICOM’s assessment and demand
At the core of the disagreement between NAICOM and the companies are charges which the two insurance companies described as “illegal”, as well as a directive allegedly requiring them to transfer their entire recapitalisation funds into an escrow account with the CBN.
The Ministry of Finance acknowledged that the petitioners raised concerns over NAICOM’s assessment and demand for a percent capital injection fee, besides processing and verification charges under Appendix 2 of the Commission’s Minimum Capital Requirement Guidelines.
The combined assessment amounted to N305 million for NICON and N375 million for Nigeria Re, according to the letter.
The affected companies also challenged what they described as a directive requiring existing and operational insurance firms to transfer their entire capital injection funds into an escrow account at the CBN.
They as well contended that this directive exceeded the 10 percent statutory deposit requirement provided under Section 16(3) of NIIRA 2025.
The Federal Ministry of Finance, in its response letter, noted Minister Oyedele had received the petition, and is seeking NAICOM’s position on the issues raised therein.
The letter further stated: “The Ministry has received a petition dated 27th July, 2026 from NICON Insurance Limited (NICON) and Nigeria Reinsurance Corporation (Nig Re) regarding the ongoing recapitalisation exercise under the Nigerian Insurance Industry Reform Act (NIIRA), 2025.
“The petitioners have raised notable grievances against the Commission regarding:
“i. The assessment and demand for a 1% Capital Injection Fee alongside additional processing and verification fees pursuant to Appendix 2 of the Commission’s Minimum Capital Requirement Guidelines, amounting to N305 million for NICON and N375 million for Nig Re; and
“ii. Directives requiring existing, operational insurance entities to transfer their entire capital injection funds into an escrow account at the Central Bank of Nigeria (CBN), as against the 10% statutory deposit requirement prescribed under Section 16(3) of NIIRA 2025.”
Did NICON and Nigeria Re meet statutory recapitalisation deadline?
According the Federal Ministry of Finance, both NICON Insurance Limited and Nigeria Reinsurance Corporation as well maintained that they had met the statutory deadline for recapitalisation, and subsequently, injected amounts above their adjusted capital requirements.
The Ministry further indicated that NICON disclosed it injected N20 billion into a Mudaraba Term Deposit account with Lotus Bank Limited, compared with its adjusted requirement of N16 billion.
Likewise, Nigeria Re reportedly injected N30 billion into a similar Mudaraba Term Deposit account, exceeding its adjusted requirement of N28 billion.
The companies, therefore, petitioned the Federal Ministry of Finance that they had made statutory deposits with the CBN in line with Section 16(3) of the new insurance law.
It is also noted that NICON deposited N2.5 billion with the banking sector regulator while Nigeria Re deposited N3.5 billion.
The petitioners further informed the Ministry that they had already made initial fee payments of N80 million and N75 million respectively.
The Federal Government said the companies, therefore, believed they had fulfilled the statutory requirement ahead of the July 31, 2026, deadline for insurance industry recapitalisation in Nigeria.
“The petitioners contend that they have complied with the statutory deadline of 31st July 2026 by injecting N20 billion and N30 billion respectively into Mudaraba Term Deposit accounts with Lotus Bank Limited, exceeding their adjusted requirements of N16 billion and N28 billion.
“They also submit that they have deposited N2.5 billion and N3.5 billion with the CBN pursuant to Section 16(3) of NIIRA 2025 and had made initial fee payments of N80 million and N75 million,” the Minister stated.
In view of the foregoing, the Federal Ministry of Finance directed NAICOM to provide a “detailed explanation” of the basis for the disputed charges and escrow directives.
It also directed the insurance regulator to suspend enforcement of the contested measures against the two companies, pending the determination of the petition.
It further noted: “In view of the above, you are requested to provide a detailed response and legal justification regarding the issues raised.
“Pending the determination of the petition, the Commission should suspend the enforcement of the contested processing fees, 1 percent capital injection fee demands, and full-capital escrow transfer directives against NICON Insurance Limited and Nigeria Reinsurance Corporation.”
Core objectives of insurance industry recapitalisation exercise
ConsumerConnect reports the Nigerian Government has said the country’s recapitalisation exercise is intended to strengthen the financial capacity of insurers and reinsurers, improve their ability to underwrite larger risks, enhance industry resilience and position the sector to play a bigger role in financing economic activities.
However, industry observers noted the current dispute involving NICON and Nigeria Re raises questions about the fees being imposed on companies participating in the exercise, and the extent of funds that regulators could require companies to place with the CBN.
NICON and Nigeria Re’s position, as conveyed to the Finance Ministry, is that the companies have already injected capital above their adjusted requirements, and fulfilled the statutory deposit obligation under the new insurance law.
The companies, therefore, have challenged the basis for requiring the entire capital injection to be transferred to a CBN escrow account when, according to their interpretation of Section 16(3) of NIIRA 2025, only 10 percent is required as a statutory deposit.
The Finance Ministry’s intervention has effectively placed the disputed charges and the full-capital escrow directive on hold pending NAICOM’s response and legal justification, according to report.