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The National Insurance Commission (NAICOM) has defended its recently introduced minimum capital requirements for insurtech firms, describing the policy as a necessary measure to preserve financial stability and public confidence while promoting technological innovation within the insurance sector.
Speaking at the Annual Seminar for Insurance Journalists in Abeokuta, Ogun State, NAICOM’s Deputy Commissioner, Technical, Dr. Usman Jankara, explained that the framework offers insurtechs two operational pathways — either by partnering with existing insurers or operating as stand-alone digital insurance providers.
Under the new guidelines, stand-alone insurtech companies are required to maintain a minimum capital base of ₦1.5 billion for each category of general business or ₦1 billion for life insurance. However, firms that choose to partner with traditional insurers can operate with a ₦10 million minimum capital requirement, complemented by a professional indemnity cover of at least ₦100 million.
“If you choose to partner, all you need is ₦10 million to operate. But a stand-alone insurtech is essentially a mini-insurance company and must have capital,” Jankara clarified.
He stressed that the capital thresholds are designed to protect policyholders and preserve trust in the insurtech ecosystem. “We must balance innovation with prudential soundness. If insurtechs fail to meet their obligations, public confidence will collapse and set the industry back 20 years,” he warned.
Jankara noted that the new capital levels represent about 10 per cent of the requirement for traditional insurers under the Nigerian Insurance Industry Reform Act, underscoring NAICOM’s flexible approach to supporting innovation while maintaining market integrity.
He added that the guidelines were developed through extensive consultations with industry stakeholders and reaffirmed the Commission’s commitment to fostering collaboration and innovation in the insurance technology space.
In addition, Jankara disclosed that under the new regulatory framework, insurers that delay claim settlements will face a minimum fine of ₦500,000, plus compounded interest at the prevailing bank rate for the duration of the delay. “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 explained.
He also cited legal and security considerations for not disclosing claim payment details publicly, noting that data protection laws and confidentiality obligations must be upheld to protect consumers and ensure compliance.
Dr. Jankara reaffirmed that NAICOM’s ultimate goal is to balance innovation, consumer protection, and financial soundness, ensuring that the insurtech landscape in Nigeria grows on a stable and sustainable foundation.
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