NAICOM Backs Capital Rules for Insurtechs, Says Regulation Balances Innovation, Stability

The National Insurance Commission (NAICOM) has defended its new minimum capital requirements for insurtech firms, describing the regulation as necessary to maintain financial soundness while supporting innovation in the insurance sector.

Speaking at the annual seminar for insurance journalists in Abeokuta, Ogun State, NAICOM’s Deputy Commissioner (Technical), Dr. Usman Jankara, said the framework provides two operational options for insurtech companies — to operate independently or in partnership with existing insurance firms.

Under the guidelines, insurtechs that choose to operate as stand-alone entities must maintain a minimum capital of N1.5bn per category of general business or N1bn per category of life business, or as otherwise determined by the Commission.

Those partnering with traditional insurers are required to hold at least N10m in capital and a professional indemnity cover of N100m.

“If you choose to partner, all you need is N10m to operate. But a stand-alone insurtech is essentially a mini-insurance company and must have capital,” Jankara explained.

He said the capital thresholds were set to protect policyholders and preserve confidence in the emerging insurtech ecosystem.

“We must balance innovation with prudential soundness. If insurtechs fail to meet obligations, public confidence will collapse and set the industry back 20 years,” he warned.

Jankara noted that the capital requirement represents about 10 per cent of what is required of conventional insurers under the new Nigerian Insurance Industry Reform Act.

He added that the guidelines were developed after extensive stakeholder consultations and reflect NAICOM’s commitment to collaboration and sustainable innovation.

The deputy commissioner also disclosed that under the new law, insurers who delay claims settlement now face a minimum penalty of N500,000 in addition to compounded interest at the prevailing bank rate.

“If the prevailing rate is 28 per cent, it will be applied on top of the unpaid amount, compounded over the period of delay,” he said.

Jankara further cited legal and security considerations for NAICOM’s decision not to publicise claim payments, explaining that data protection and confidentiality laws prevent such disclosures.