Regulator asked to explain legal basis for disputed fees and full-capital escrow directive as two state-owned insurers challenge implementation of new insurance law
The Federal Ministry of Finance has directed the National Insurance Commission (NAICOM) to suspend enforcement of disputed recapitalisation charges and a directive requiring two government-owned insurance companies to place their entire fresh capital in an escrow account with the Central Bank of Nigeria.
The intervention follows a petition by NICON Insurance Limited and the Nigeria Reinsurance Corporation, which challenged what they described as unlawful fees and regulatory directives issued as part of the ongoing insurance industry recapitalisation exercise.
In a letter dated August 6, 2026, the ministry asked NAICOM to provide a detailed explanation and legal justification for the disputed measures, including assessments of N305 million against NICON and N375 million against Nigeria Re.
The letter, signed by the Permanent Secretary, Finance, Raymond Omachi, on behalf of the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, was addressed to the Commissioner for Insurance and obtained by The PUNCH on Monday.
The ministry’s action followed a July 27 petition submitted by the two insurers over the implementation of the Nigerian Insurance Industry Reform Act, 2025.
At the centre of the dispute is NAICOM’s demand for a one per cent capital injection fee, in addition to processing and verification charges under Appendix 2 of its Minimum Capital Requirement Guidelines.
The companies have also objected to a directive requiring existing insurance firms to transfer their entire recapitalisation funds into an escrow account with the CBN.
According to NICON and Nigeria Re, the requirement goes beyond the statutory deposit prescribed by the new insurance law.
The Finance Ministry said the companies raised two principal concerns in their petition.
The first relates to the assessment and demand for a one per cent capital injection fee, alongside processing and verification charges. The ministry put the disputed assessments at N305 million for NICON and N375 million for Nigeria Re.
The second concerns the alleged requirement for existing and operational insurers to transfer their entire capital injection into a CBN escrow account, rather than the 10 per cent statutory deposit stipulated by Section 16(3) of the Nigerian Insurance Industry Reform Act.
The ministry said it had received the petition and was seeking NAICOM’s position before determining the matter.
“Pending the determination of the petition, the Commission should suspend the enforcement of the contested processing fees, 1 per cent capital injection fee demands, and full-capital escrow transfer directives against NICON Insurance Limited and Nigeria Reinsurance Corporation,” the ministry stated.
The two companies told the ministry that they had already complied with the recapitalisation requirements before the July 31, 2026 deadline.
NICON said it injected N20 billion into a Mudaraba Term Deposit account with Lotus Bank Limited, exceeding its adjusted capital requirement of N16 billion.
Nigeria Re, meanwhile, injected N30 billion, compared with its adjusted requirement of N28 billion.
The insurers also said they had fulfilled the statutory deposit requirement with the CBN.
NICON reportedly deposited N2.5 billion, while Nigeria Re deposited N3.5 billion.
In addition, the companies said they had made initial payments of N80 million and N75 million, respectively, toward the applicable fees.
The ministry said the insurers therefore considered themselves compliant with the new capital requirements ahead of the July 31 deadline.
A major point of contention is the amount of recapitalisation funds NAICOM can require existing insurers to place in escrow.
NICON and Nigeria Re argue that Section 16(3) of NIIRA 2025 requires a statutory deposit of 10 per cent, rather than the transfer of the entire capital injection.
Their position is that they have already injected more than the adjusted capital thresholds set for them and separately fulfilled the statutory deposit obligation.
The companies are therefore questioning the legal basis for requiring the full capital injection to be moved into a CBN escrow account.
The Finance Ministry has now asked NAICOM to explain the legal foundation for both the charges and the escrow directive.
The ministry’s letter also referenced an alleged N500 million demand described in its subject as shareholders’ funds constituting an illegal one per cent fee on the capital injection, alongside an additional N180 million capitalisation charge.
However, the substantive portion of the letter specifically identified the disputed assessments as N305 million for NICON and N375 million for Nigeria Re, covering the one per cent capital injection fee as well as processing and verification charges.
The discrepancy in the figures could require further clarification as NAICOM responds to the ministry’s request.
The dispute comes as the Federal Government pushes ahead with a sweeping recapitalisation programme aimed at strengthening Nigeria’s insurance industry.
The exercise is intended to improve insurers’ financial capacity, enable them to underwrite larger risks, strengthen the resilience of the sector and increase the industry’s contribution to financing economic activity.
However, the disagreement between the two state-owned insurers and NAICOM highlights the regulatory challenges that can arise as companies transition to the new capital regime.
For existing insurers, the central question is not only how much additional capital they must raise but also the fees attached to the process and how regulators can require those funds to be held.
The Finance Ministry’s intervention means that, for now, enforcement of the disputed charges and full-capital escrow directive against NICON and Nigeria Re is expected to remain suspended while NAICOM provides its response and legal justification.
The outcome could have wider implications for other insurers navigating the new recapitalisation framework, particularly if similar questions arise over the interpretation of statutory deposits, capital injection fees and the regulator’s powers under the 2025 insurance law.
For the industry, the immediate focus will now shift to NAICOM’s response and whether it can establish a clear legal basis for the disputed demands without undermining the broader objective of strengthening the capital position of Nigeria’s insurers.
