The Nigerian Senate has passed the Insurance Reform Bill 2024, which raises the minimum capital base for insurance companies operating in the country.
The reform bill sponsored by Mukhail Abiru, chairman, Senate Committee on Banking, Insurance and Other Financial Institutions, proposes the minimum capital requirement of life insurance companies from the current ₦2 billion to ₦15 billion, and general business from ₦3 billion to ₦25 billion. The reinsurance business’ capital will increase from ₦10 billion to ₦45 billion, as reported by
The bill was read for the third time on Tuesday, following a clause-by-clause consideration and a majority vote in favour by the lawmakers.
Section 15 of the bill proposes that a person shall not carry on an insurance business in Nigeria unless the insurer has and maintains the minimum capital requirement.
The bill will now be transmitted to the House of Representatives for concurrence, after which it will be transmitted to President Bola Tinubu for assent to become law.
Once enacted, insurance companies across Nigeria will need to comply with the revised minimum capital requirements to continue operations.
Explaining the significance of the bill, Abiru noted that a key objective of the bill is to consolidate the various existing pieces of legislation such as the Insurance Act 2003, the Marine Insurance Act, the National Insurance Corporation Act and the Nigerian Reinsurance Act, which he noted are obsolete and currently stiffen the industry’s potential to compete globally.
“They do not resonate with the current dynamics and evolving needs of Nigeria’s insurance industry. All these legislations have surpassed the three-decade mark and the lack of issues that can adequately address contemporary challenges and support growth and innovation to this leading industry. These legal obsolescence has led to some of the regulatory inefficiencies in the insurance industry, and these have also hampered the industry’s ability to successfully compete on a global level” Abiru explained.
The Senator said the Bill also seeks to evolve effective risk-based cooperation between regulators.
“Another objective is also its need for a robust legal and regulatory framework that will ensure that the insurance sector contributes positively to the principal objectives of the financial system in order to make Nigeria Africa’s financial hub and one of the 20 largest economies in the world,” he added.
