The National Insurance Commission (NAICOM) has engaged global professional services firm, Ernst & Young (EY), to fast-track the implementation of the Risk-Based Capital (RBC) framework, signalling a major shift in the regulation of Nigeria’s Insurance industry.

The appointment formalised during a working meeting in Abuja is expected to accelerate the transition from the existing rule-based capital regime to a risk-sensitive framework designed to strengthen insurers’ financial resilience, improve policyholders’ protection and align the industry with international regulatory standards.

Speaking at the meeting, the Commissioner for Insurance, Olusegun Omosehin, said NAICOM has been laying the groundwork for a risk-based supervisory system, which reflects the unique characteristics and risk profile of the market.

According to him, the initiative follows the enactment of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 and the ongoing minimum capital requirement (MCR) recapitalisation exercise, both of which have provided the legal and financial foundation for the next phase of reforms.

Omosehin explained that the implementation of the RBC framework would commence at the completion of recapitalisation, with the commission set to embark on quantitative impact studies (QIS) and industry-wide data collection to determine appropriate capital parameters for operators.

“The objective is to establish a regulatory framework that ensures capital adequacy is linked to the actual risks undertaken by insurance companies, thereby enhancing financial stability and market confidence,” he said.

Under the arrangement, EY will provide actuarial and technical support to NAICOM, assist in the development and implementation of tools, strengthen the commission’s internal capacity and support stakeholder engagement throughout the transition process.

EY representatives described the assignment as a strategic intervention that would contribute significantly to the modernisation of insurance regulation in Nigeria.

The firm pledged to work closely with NAICOM and industry operators to develop a robust and practical framework capable of supporting sustainable industry growth while ensuring compliance with global regulatory standards.

“EY is honoured to support NAICOM on this important initiative. We are committed to deploying our global expertise and actuarial capabilities to help deliver a transparent, effective and risk-sensitive capital framework that will strengthen the resilience of Nigeria’s insurance sector and enhance stakeholder confidence,” the firm said.

The adoption of a risk-based capital regime has been hailed as one of the most significant regulatory reforms in the sector’s history, as it shifts emphasis from fixed capital thresholds to a system that measures capital requirements based on the actual risks undertaken by insurers.