Insurers await N300bn as CBN begins verification of recapitalisation funds

Nigeria’s insurance companies are awaiting the release of about N300 billion held in escrow accounts as the Central Bank of Nigeria (CBN) begins due diligence to verify the funds following the completion of the industry’s recapitalisation exercise.

The National Insurance Commission (NAICOM) has formally instructed the apex bank to return the money to the insurance and reinsurance companies that deposited it, according to the Nigerian Insurers Association (NIA).

NIA Chairman Ebelechukwu Nwachukwu said the funds would be returned to the same accounts from which they were transferred once the CBN completes its verification process.

“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 release is coming later than initially expected. Commissioner for Insurance Olusegun Ayo Omosehin had earlier indicated that the affected operators would receive their funds by the end of September.

The latest update, however, points to October as the expected period for the money to be returned, with the CBN’s ongoing checks determining the timing.

The funds were placed in escrow accounts as part of the regulatory process surrounding the insurance sector’s recapitalisation exercise, which was designed to strengthen operators’ financial capacity and improve their ability to underwrite larger risks.

Following the completion of the exercise, NAICOM has also moved towards implementing a Risk-Based Capital (RBC) framework aimed at aligning capital requirements more closely with the risks carried by individual insurance companies.

Nwachukwu said the commission had appointed global professional services firm Ernst & Young (EY) as a consultant to guide the industry through a structured transition to the new framework.

The consultant is expected to support the development and implementation process, with an exposure draft of the framework to be shared with industry operators for review before its final adoption.

Nwachukwu urged insurers that successfully met the recapitalisation requirements to use their stronger capital positions to expand domestic underwriting capacity, retain a greater share of risks during reinsurance renewals and develop coverage for emerging threats, including cyber and climate-related risks.

She also called on operators to improve claims settlement and digital integration as the regulator advances its plans to automate industry operations.

The return of the escrow funds is now a key outstanding step for the affected companies as the sector moves from recapitalisation towards implementing the new capital and risk-management framework.