The Nigerian insurance industry is undergoing a significant transformation driven by the Nigerian Insurance Industry Reform Act 2025, which mandates higher capital requirements for insurance companies. This recapitalization aims to strengthen the industry’s financial stability and enhance its capacity to underwrite larger risks, contributing to the nation’s economic growth aspirations. Chukwuemeka Akwiwu, Executive Director (Technical) at Continental Reinsurance Plc, has emphasized the critical role of robust governance in ensuring that the influx of fresh capital translates into sustainable growth and enhanced public trust. He argues that while increased capital provides a stronger foundation, it is effective governance that ensures its judicious deployment and responsible risk management.
Akwiwu’s core message centers on the idea that governance acts as a “multiplier of capital.” While capital can be transient, strong governance frameworks create an environment where capital is not only preserved but also amplified in its impact. He stresses that the increased capital requirements necessitate a shift beyond mere compliance to a culture of proactive risk management and strategic oversight embedded at every operational level. This entails making compliance a guiding principle rather than a reactive measure, ensuring decisions are made responsibly and with foresight.
The recapitalization initiative, marked by a transition to a risk-based capital framework, requires insurers to calculate their capital needs based on the specific risks they face, including insurance, market, credit, and operational risks. This signifies a departure from the previous uniform capital requirements and necessitates a more nuanced approach to risk assessment and management. Akwiwu advocates for a proactive approach where risks are carefully evaluated, exposure limits are defined, and necessary protections are implemented before underwriting new business. This proactive risk management approach is essential for ensuring the effective utilization of the increased capital and safeguarding the long-term stability of the industry.
A key aspect of strengthening governance, according to Akwiwu, is the composition and effectiveness of company boards. He urges insurers to re-evaluate their boards, conduct thorough skills gap analyses, and prioritize merit and value addition in the selection of board members. He emphasizes the importance of moving away from appointments based on personal relationships and instead focusing on expertise, accountability, and the ability to contribute meaningfully to the company’s strategic direction. This shift towards merit-based board appointments is crucial for enhancing the oversight function of boards and ensuring that they are equipped to navigate the evolving landscape of the insurance industry.
Akwiwu’s vision for the Nigerian insurance industry is optimistic. He believes that the combination of stronger capital and robust governance will not only enhance the stability of individual companies but also foster greater public trust in insurance products and services. This increased trust, he argues, will create a virtuous cycle of growth and deeper market penetration, contributing significantly to Nigeria’s economic development goals. By building a more resilient and trustworthy insurance sector, the industry can play a vital role in supporting the nation’s economic aspirations.
In conclusion, Akwiwu’s call to action emphasizes the crucial interplay between capital and governance in the Nigerian insurance industry’s transformation. He underscores that while the increased capital requirements provide the necessary financial strength, it is the implementation of robust governance frameworks that will ultimately determine the industry’s success. This includes proactive risk management, strategic oversight at all levels, merit-based board appointments, and a culture of compliance. By embracing these principles, the Nigerian insurance industry can effectively leverage the recapitalization initiative to achieve sustainable growth, enhance public trust, and contribute meaningfully to the nation’s economic progress.
