Internal due diligence and processing by the Central Bank of Nigeria (CBN) is instrumental to the current delay in the release of N300 billion insurance sector recapitalisation funds sitting in the escrow accounts of the 24 insurance and reinsurance firms that raised fresh capital during the recently concluded recapitalisation exercise.
The insurance sector regulator, the National Insurance Commission (NAICOM), said it has formally instructed the apex bank to release the funds back to the underwriting companies’ account.
The Commissioner for Insurance, Mr. Olusegun Ayo Omosehin, had at a press briefing in Lagos last month told the media that the recapitalised insurance and reinsurance firms concerned would by the end of September receive their deposited funds in their escrow account with CBN.
But as at today (Tuesday Oct 13), none of the firms has received any fund from the apex bank.
Addressing the press in a virtual press briefing to announce the outcome of recent Insurers’ Committee meeting held in Lagos between insurance chief executives and NAICOM, the Chairman, Nigerian Insurers Association (NIA), Mrs. Ebelechukwu Nwachukwu, disclosed
that NAICOM has formally instructed the apex bank to release the funds back to the underwriters’ original accounts but that the CBN is currently executing its internal due diligence processes.
She however assured operators that the funds were expected to be fully returned within this month of October.
“NAICOM has done its part by issuing instructions to the CBN. The funds will be returned to the exact accounts from which they were sent once the CBN completes its verification,” she stated.
She urged the 50 insurance operators that crossed the recapitalisation hurdle to deploy the enhanced capital base to expand local underwriting capacity, increase retention during reinsurance renewals, and provide cover for emerging exposures such as cyber and climate risks.
She said having successfully concluded the recapitalisation exercise the regulator has come up with implementation of the Risk Base Capital model.
She said the regulator has appointed global professional services firm Ernst & Young (EY) as its consultant to guide the Nigerian insurance industry through a transparent and structured transition to a Risk-Based Capital (RBC) regime.
According to her, the Commissioner for Insurance, Olusegun Omosehin, announced the appointment during the insurers’ committee meeting alongside other crucial regulatory directives shaping the post-recapitalisation era.
Nwachukwu noted that EY has already made a high-level presentation to Chief Executive Officers in the industry, adding that an exposure draft of the RBC framework would be shared with operators for review before its final adoption by NAICOM.
The NIA Chairman urged underwriters to step up claims settlement processes and embrace digital integration to align with NAICOM’s fully automated operational framework and newly launched Personal Service Charter.
She also charged companies to develop core, insurance-focused health and medical products – distinct from Health Maintenance Organisation (HMO) arrangements – to boost insurance penetration across the country.
To bridge the critical shortage of actuarial capacity in Nigeria, Nwachukwu announced that the industry had established a Joint Actuarial Development Fund targeted for full operational takeoff by January 2027.
She said under the framework, NAICOM would provide 20 per cent of the fund, while insurance operators would contribute the remaining balance alongside financial support from external non-governmental development partners.
At the press briefing, Nwachukwu who was the Chairman Communications and Stakeholders Engagement Subcommittee because of her current position as Chairman Nigeria Insurers Association (NIA) handed over the leadership of the subcommittee to her deputy Mr. Maruf Apampa, who will henceforth steer the subcommittee’s public awareness and stakeholder engagement initiatives.
