NAICOM Urges Insurers to Turn Recapitalisation Funds Into Stronger Underwriting and Better Services

The National Insurance Commission (NAICOM) has urged insurance companies to shift their focus from the amount of capital raised during the industry’s recapitalisation exercise to the value that the additional capital can create through stronger underwriting, improved claims settlement, innovation and better customer service.

The Commissioner for Insurance and Chief Executive Officer of NAICOM, Olusegun Ayo Omosehin, made the call at the 2026 BusinessDay Insurance Conference, themed “From Capital to Capacity: Driving Growth, Innovation and Trust in Nigeria’s Insurance Sector.”

Omosehin, who was represented by Clifford Ndubem, Head of Finance, Lagos Control Office of NAICOM, said recapitalisation should not be viewed as an achievement in itself.

According to him, the success of the exercise will ultimately depend on how effectively insurers convert stronger balance sheets into greater operational capacity, improved governance, technological advancement and better customer experiences.

What you should know

Recapitalisation involves requiring insurance companies to strengthen their financial capacity by raising additional capital.

The immediate objective is to give insurers stronger balance sheets and greater ability to absorb losses, underwrite larger risks and meet their obligations to policyholders.

However, a company can have a larger capital base without necessarily becoming a better insurer.

This is the distinction NAICOM is emphasising.

The regulator’s message is that the industry must now move from “How much capital was raised?” to “What is the capital being used to achieve?”

Capital must translate into underwriting capacity

One of the most important ways insurers can deploy additional capital is by increasing their ability to underwrite risks.

A stronger capital position can allow insurers to take on larger and more complex risks while maintaining adequate solvency buffers.

This is particularly relevant for sectors such as energy, infrastructure, aviation, construction and large-scale industrial projects, where individual risks can be too large for smaller insurers to absorb comfortably.

Greater underwriting capacity could also reduce the extent to which Nigerian businesses depend on foreign insurers or international markets for certain large risks, provided local insurers have the expertise and risk-management systems required to support those exposures.

Claims settlement will be a key test

For policyholders, the value of recapitalisation will ultimately be judged less by the size of an insurer’s balance sheet and more by what happens when they make a legitimate claim.

Improved claims settlement can strengthen confidence in insurance and encourage more individuals and businesses to maintain policies.

Delayed, disputed or poorly communicated claims processes can have the opposite effect.

NAICOM’s emphasis on customer experience therefore places claims management at the centre of the industry’s post-recapitalisation performance.

Technology could determine how efficiently capital is deployed

Technology is another area where the additional capital can create value.

Insurers can invest in digital platforms, automated claims processing, data analytics, fraud detection, customer relationship systems and more efficient underwriting processes.

These investments can potentially reduce operating costs while improving the speed and accuracy of services.

Technology can also help insurers reach customers who are currently underserved by traditional insurance distribution channels.

This is particularly important in Nigeria, where insurance penetration remains relatively low compared with the size of the country’s population and economy.

Stronger governance is part of the equation

NAICOM also highlighted governance as an important measure of whether recapitalisation is delivering its intended benefits.

More capital does not eliminate the need for strong risk management and corporate governance.

Insurance companies manage funds and risks on behalf of policyholders, making effective oversight critical.

Stronger governance can help companies make better underwriting decisions, control operational risks, manage investments responsibly and maintain adequate reserves.

The additional capital should therefore be accompanied by improvements in the systems used to manage it.

Why the industry cannot stop at recapitalisation

A successful recapitalisation exercise can strengthen the financial foundation of an insurance company, but it does not automatically generate growth.

Insurers still need to attract customers, price risks correctly, settle claims efficiently and develop products that meet changing customer needs.

They also need to manage inflation, foreign-exchange movements, investment risks and other economic pressures that can affect their balance sheets.

This means the next phase of the industry will be about capital productivity.

The question is whether the additional funds can generate stronger businesses rather than simply larger balance sheets.

More capital could support industry consolidation and scale

A stronger capital base can also improve the ability of insurance companies to participate in larger transactions and compete for major corporate accounts.

Companies with greater financial capacity may be able to retain a larger portion of the risks they underwrite rather than relying heavily on reinsurance.

However, retaining more risk also requires sophisticated actuarial, underwriting and risk-management capabilities.

Capital without those capabilities could simply increase the amount of risk an insurer is capable of taking without necessarily improving the quality of its decisions.

The bigger picture

NAICOM’s message marks a shift in emphasis for Nigeria’s insurance industry.

The recapitalisation exercise was designed to strengthen the financial foundation of insurers, but capital itself is not the final objective.

The real measure of success will be whether insurers use that stronger financial base to expand underwriting capacity, improve claims settlement, strengthen governance, invest in technology and deliver better services to customers.

For policyholders, this could mean faster claims processing, more relevant insurance products and greater confidence in insurers.

For businesses, stronger domestic insurers could provide greater capacity to cover large and complex risks.

For the industry, the next challenge is therefore not simply to demonstrate that more money has been raised, but to demonstrate that the money is creating measurable improvements in capacity, trust and value.

In practical terms, Nigeria’s insurance sector has moved from the question of “How much capital do insurers have?” to the more important question of “What can insurers do with it?”