The insurance industry may face rising reinsurance costs as escalating conflict involving the United States, Israel and Iran threatens to trigger rising claims globally, a development that could push international reinsurers to review rates upward, the National Insurance Commission (NAICOM) has warned.

The Commissioner for Insurance, Olusegun Omosehin, noted that the ongoing conflict could lead to an upward review of global reinsurance rates, a development that would inevitably affect Nigerian insurers that depend heavily on offshore capacity to underwrite large and complex risks.

Omosehin explained that insurance operates within a global risk-sharing ecosystem where exposures are distributed among local and international reinsurers, many of whom determine the final pricing.

According to him, the scale of destruction to businesses, oil installations and other strategic assets in the conflict zone could generate significant claims within the global insurance market, forcing reinsurers to reassess their risk appetite and pricing framework.

“The destruction of infrastructure and businesses in the conflict region will translate into substantial insurance claims globally, and that will naturally influence reinsurance pricing,” he said.

For Nigerian insurers, the impact could be immediate, coming at the next reinsurance renewal cycle, when companies typically negotiate treaty arrangements with global reinsurance firms to support their capacity.

Local industry relies on offshore reinsurance markets for high-value and specialised risks that exceed domestic capacity. Under Nigeria’s local content framework, insurers are required to first exhaust local insurance and reinsurance capacity before ceding excess risks abroad.

Where local capacity is insufficient, insurers typically place reinsurance cover with leading global firms such as Swiss Re, Munich Re, Lloyd’s of London, Allianz, AXA and GIC Re.

The global gaps largely determine premium rates for reinsurance placements across markets, often reflecting global loss experience and catastrophe exposures rather than conditions within a specific country.

Omosehin, however, assured policyholders that the ongoing reform and recapitalisation programme in Nigeria’s insurance industry would strengthen the sector’s ability to withstand external shocks and meet claims obligations.