The Federal Ministry of Finance has directed the National Insurance Commission (NAICOM) to suspend enforcement of disputed recapitalisation fees and a directive requiring two state-owned insurance companies to transfer their entire fresh capital into an escrow account with the Central Bank of Nigeria (CBN).
The ministry also demanded a detailed response and legal justification from NAICOM over assessments of N305 million against NICON Insurance Limited and N375 million against the Nigeria Reinsurance Corporation.
The development was contained in a letter dated August 6, 2026, signed by the Permanent Secretary, Finance, Raymond Omachi, on behalf of the Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele.
The letter, addressed to the Commissioner for Insurance, followed a petition dated July 27, 2026, submitted by NICON and Nigeria Re over the implementation of the Nigerian Insurance Industry Reform Act (NIIRA) 2025.
At the centre of the dispute are charges the two companies described as illegal, as well as an alleged directive requiring them to transfer their entire recapitalisation funds into an escrow account with the CBN.
The Finance Ministry said the companies had raised concerns over NAICOM’s assessment and demand for a one per cent capital injection fee, alongside processing and verification charges under Appendix 2 of the commission’s Minimum Capital Requirement Guidelines.
According to the ministry, the combined assessments amounted to N305 million for NICON and N375 million for Nigeria Re.
The companies also challenged what they described as a directive requiring existing and operational insurance firms to transfer their entire capital injection funds into a CBN escrow account.
They argued that the directive exceeded the 10 per cent statutory deposit requirement prescribed under Section 16(3) of NIIRA 2025.
The ministry said it had received the petition and was seeking NAICOM’s position on the issues raised.
The letter stated that the petitioners had raised grievances concerning the one per cent capital injection fee and additional processing and verification charges, as well as the directive requiring full transfer of capital injection funds into a CBN escrow account.
The two companies maintained that they had met the statutory deadline for recapitalisation and had injected amounts above their adjusted capital requirements.
NICON, according to the ministry, injected N20 billion into a Mudaraba Term Deposit account with Lotus Bank Limited, compared with its adjusted requirement of N16 billion.
Nigeria Re, meanwhile, injected N30 billion into a similar Mudaraba Term Deposit account, exceeding its adjusted requirement of N28 billion.
The companies also told the ministry that they had made statutory deposits with the CBN in line with Section 16(3) of the new insurance law.
NICON deposited N2.5 billion with the CBN, while Nigeria Re deposited N3.5 billion.
The petitioners further informed the ministry that they had already made initial fee payments of N80 million and N75 million, respectively.
The ministry said the companies therefore believed they had fulfilled the statutory requirement ahead of the July 31, 2026 deadline.
The letter stated that the companies had complied with the deadline by injecting N20 billion and N30 billion respectively into Mudaraba Term Deposit accounts, exceeding their adjusted requirements of N16 billion and N28 billion.
The companies also said they had deposited N2.5 billion and N3.5 billion with the CBN under Section 16(3) of NIIRA 2025 and made initial fee payments of N80 million and N75 million.
Against this backdrop, the Finance Ministry asked NAICOM to provide a detailed explanation of the basis for the disputed charges and escrow directives.
It also directed the insurance regulator to suspend enforcement of the contested measures against the two companies pending the determination of the petition.
The ministry stated: “Pending the determination of the petition, the Commission should suspend the enforcement of the contested processing fees, 1 per cent capital injection fee demands, and full-capital escrow transfer directives against NICON Insurance Limited and Nigeria Reinsurance Corporation.”
The intervention comes as the Federal Government pushes insurance companies to strengthen their capital base under the ongoing industry recapitalisation programme.
The recapitalisation exercise is aimed at strengthening the financial capacity of insurers and reinsurers, improving their ability to underwrite larger risks, enhancing industry resilience and positioning the sector to play a bigger role in financing economic activities.
However, the dispute involving NICON and Nigeria Re raises questions about the fees being imposed on companies participating in the exercise and the extent of funds that regulators can require companies to place with the CBN.
The issue is particularly significant for existing insurance companies already operating and seeking to meet the new capital requirements, as opposed to new entrants seeking licences.
NICON and Nigeria Re’s position, as conveyed to the Finance Ministry, is that they have already injected capital above their adjusted requirements and fulfilled the statutory deposit obligation under the new insurance law.
The companies have also challenged the basis for requiring the entire capital injection to be transferred to a CBN escrow account.
According to their interpretation of Section 16(3) of NIIRA 2025, only 10 per cent is required as a statutory deposit.
The letter did not state the outcome of any subsequent engagement between the ministry and NAICOM, nor did it disclose whether the regulator had responded to the issues raised.
It also referenced an alleged N500 million demand described in the subject of the letter as shareholders’ funds constituting an illegal one per cent fee on the capital injection, as well as an additional N180 million capitalisation charge.
However, the substantive body of the letter specifically quantified the disputed assessment at N305 million for NICON and N375 million for Nigeria Re, comprising the one per cent capital injection fee and additional processing and verification charges.
The Finance Ministry’s intervention effectively places the disputed charges and the full-capital escrow directive on hold pending NAICOM’s response and legal justification.
For the two companies, the immediate issue is whether the regulator can sustain the disputed fees and the demand for full transfer of the recapitalisation funds.
The broader insurance industry is also awaiting clarity on the implementation of the new capital regime.
The development highlights the regulatory balancing act involved in the recapitalisation exercise: strengthening insurers’ balance sheets without imposing additional financial burdens or requirements that companies contend are not expressly provided for under the law.
