NAICOM tasks insurers on governance, warns against capital erosion

The National Insurance Commission (NAICOM) has challenged the boards of insurance companies to translate the gains of the recapitalisation exercise into stronger corporate governance, prudent capital management and improved protection for policyholders, warning that meeting new capital requirements alone will not guarantee institutional resilience.

The Commissioner for Insurance, Olusegun Omosehin, gave the charge at the 2026 Insurance Directors’ Conference in Lagos, where he urged directors to take greater responsibility for strategic oversight, risk management and accountability as the industry transitions to the Risk-Based Capital (RBC) regime.

Omosehin, who commended shareholders, boards and management of insurance companies for their commitment and sacrifices during the recapitalisation exercise, said its successful conclusion marked the beginning of a more demanding phase for the industry.

He identified poor governance, inappropriate investment decisions, ineffective risk management, excessive operating costs and uncontrolled business expansion as factors that could undermine the financial strength of insurance institutions.

Omosehin said directors must move beyond receiving management reports to actively interrogating business decisions, challenging assumptions and demanding adequate information before approving strategies that could expose their institutions to financial and operational risks.

Explaining the significance of the transition to Risk-Based Capital, the NAICOM chief said the new supervisory framework would require insurance companies to demonstrate that their capital positions were adequate for the risks they assumed, rather than merely meeting prescribed minimum capital thresholds.

He explained that while the Minimum Capital Requirement establishes the baseline capital an insurer must maintain to operate, Risk-Based Capital assesses the nature, scale and complexity of an institution’s risk exposures and the capital required to support them.

He said NAICOM would increasingly direct its supervisory attention to the quality of capital, the effectiveness of risk management frameworks, corporate governance structures, institutional resilience and insurers’ ability to meet their obligations to policyholders.

The commission, he added, would also place greater emphasis on the quality and reliability of regulatory returns, financial reporting, actuarial assessments and disclosures, urging insurance companies to ensure that information submitted to the regulator was accurate, complete and timely.