Insurance: Senate jacks up minimum capital base to N35bn

The Senate on Tuesday passed its insurance sector reform bill for a third reading.

The piece of legislation, titled “Nigerian Insurance Reform Bill, 2024,” was sponsored by the Chairman of the Senate Committee on Banking, Insurance, and Other Financial Institutions, Sen. Adetokunbo Abiru (APC, Lagos-East), and 41 other lawmakers.

It proposes far-reaching reforms, including raising the operating capital base for the reinsurance business to N35 billion, up from N10 billion.

The capital base for general insurance was raised to N15 billion from N3 billion, while the life assurance business was increased to N10 billion from N2 billion.

Senators passed the bill for third reading on Tuesday amid protests by Sen. Jimoh Ibrahim (APC, Ondo-South), a renowned insurance sector player.

Ibrahim, on a number of occasions, rose to oppose some of the provisions of the new bill, particularly the huge funding requirement needed for operators.

He argued that most insurance firms might be unable to raise the funds and also warned that the sector would face challenges attracting new entrants, in addition to job losses that could result from the new capital requirement.

However, his objections didn’t win the support of the majority of his colleagues, most of whom adopted the view of Sen. Abiru that the committee proposed the new capital requirement in view of the current economic reality of the country and its fluctuating exchange rate.

Presiding Deputy Senate President, Sen. Barau Jibrin, overruled Ibrahim’s interventions, explaining that during the clause-by-clause consideration of a bill, only amendments could be proposed for voting.

The committee, in explaining the reason for the new figures, stated that they were “necessitated by the depreciation in the value of the currency (Naira), the Finance Act, 2022, which has redefined the composition of the capital, inflation, international competitiveness, AfCFTA competitiveness, capital flight due to over-reliance on foreign insurance”

Recall that during the public hearing on the bill, financial experts held divergent views on the possible impact of the new capital requirement, with some saying that mergers and acquisitions were likely as soon as the bill was signed into law.

However, the bill, having been passed by the Senate, awaits concurrence by the House of Representatives before it will be forwarded to President Bola Tinubu.

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