By David Akinmola
The National Insurance Commission (NAICOM) has engaged global professional services firm Ernest & Young (EY) to fast-tract the implementation of a Risk-Based Capital (RBC) framework, signaling a major shift in the regulation of Nigeria’s Insurance Industry as the sector undergoes recapitalization and broader reforms.
The appointment formalized during a working meeting in Abuja, is expected to accelerate the transition from the existing rule-based capital regime to a more 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 the commission has been laying the groundwork for a risk-based supervisory system that reflects the unique characteristics and risk profile of the Nigerian insurance 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) recapitalization exercise, both of which have provided the legal and financial foundation for the next phase of regulatory reforms.
Omosehin, explained that the implementation of the RBC framework would commerce after the completion of the recapitalization programme, 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 development implementation tools, strengthen the commission internal capacity and support stakeholder engagement throughout transition process.
Responding, EY representatives described the assignment as a strategic intervention that would contribute significantly to the modernization 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.
Industry observers said the adoption of risk-based capital regime represents 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 a assumed by insurers.
“Under a risk-based system, companies with higher risk exposures are required hold more capital, while firms with lower risk profiles can operate more efficiently. It promotes sound risk management and strengthens market discipline, “they said.
In the industry stakeholders believe the framework will complement the ongoing recapitalization exercise by ensuring that capital adequacy is not only measured by size but also the quality of risk management practices within insurance companies.
They also believe that successful implementation of the RBC framework could improve investor confidence, enhance industry competitiveness and position Nigerian insurers to participate more effectively in regional and international markets.
