Insurance companies are awaiting the release of about N300 billion held in escrow accounts with the Central Bank of Nigeria (CBN) as the apex bank verifies funds deposited during the industry’s recapitalisation exercise.
The National Insurance Commission (NAICOM) has instructed the CBN to return the money to insurance and reinsurance companies that participated in the capital raising exercise. Ebelechukwu Nwachukwu, chairman of the Nigerian Insurers Association (NIA), disclosed this after a meeting of insurance industry executives and regulators in Lagos.
She said the funds would be returned to the original accounts once verification is complete. The release was initially expected by the end of September but has extended into October.
“NAICOM has done its part by issuing instructions to the CBN. The funds will be returned to the exact accounts from which they were sent once the CBN completes its verification,” Nwachukwu said.
The funds were held in escrow during the recapitalisation exercise, which required insurers to strengthen their capital bases to meet revised minimum requirements. The exercise aims to improve insurers’ capacity to cover larger risks, meet claims obligations and support businesses in sectors such as infrastructure, energy and manufacturing.
Nwachukwu urged companies that met the requirements to use their stronger capital positions to expand local underwriting and retain more risks during reinsurance renewals. She also encouraged operators to develop products addressing emerging threats, including cyber risks and climate related losses. The industry is also preparing to adopt a Risk Based Capital framework, which would align insurers’ capital requirements with the risks they carry.
Nwachukwu said NAICOM had appointed professional services firm Ernst & Young to guide the transition. An exposure draft of the framework is expected to be shared with operators for review before its final adoption. She called on insurers to improve claims settlement and embrace digital systems as the regulator advances the automation of its processes.
To address the shortage of actuarial professionals, Nwachukwu said a Joint Actuarial Development Fund was being developed, with operations expected to begin by January 2027. Under the proposed arrangement, NAICOM would provide 20 per cent of the funding, while insurance operators and development partners would contribute the remainder.
The return of the escrow funds would give eligible insurers access to capital raised during recapitalisation. The industry’s next test will be using that financial strength to improve claims payments, expand coverage and rebuild public confidence.
