Finance Ministry Queries NAICOM, Suspends 1% Capital Fee, Escrow Directive

The Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, has queried the National Insurance Commission (NAICOM) over disputed processing fees and ordered the suspension of a 1 per cent capital injection fee demanded from NICON Insurance Limited and Nigeria Reinsurance Corporation during the recently concluded insurance recapitalisation exercise.

The Minister also halted NAICOM’s directive for both firms to transfer their entire capital injection funds into an escrow account with the Central Bank of Nigeria (CBN).

This intervention, conveyed in an August 6 letter signed by the Ministry’s Permanent Secretary, Raymond Omachi, follows a July 27 petition from NICON and Nigeria Reinsurance concerning issues arising from the insurance sector recapitalisation under the Nigerian Insurance Industry Reform Act (NIIRA) 2025.

Disputed Fees and Directives

The companies challenged NAICOM’s demand for a 1 per cent Capital Injection Fee and additional processing and verification fees totalling ₦680 million—₦305 million for NICON and ₦375 million for Nigeria Re. They also objected to a directive requiring the transfer of their entire capital injection into a CBN escrow account, arguing it exceeds the 10% statutory deposit mandated by Section 16(3) of NIIRA 2025.

Both firms said they met the July 31 recapitalisation deadline, injecting ₦20 billion (NICON) and ₦30 billion (Nigeria Re) into Mudaraba Term Deposit accounts with Lotus Bank—exceeding their adjusted capital requirements of ₦16 billion and ₦28 billion, respectively. They also reported statutory deposits of ₦2.5 billion and ₦3.5 billion with the CBN, and initial fee payments of ₦80 million and ₦75 million.

Ministry Demands Legal Justification

The Finance Ministry’s letter asked NAICOM to provide a detailed response and legal justification for the disputed measures. Pending the determination of the petition, the Ministry directed NAICOM to suspend enforcement of the contested processing fees, the 1 per cent capital injection fee demands, and full-capital escrow transfer directives against the two firms.

This directive places enforcement of the disputed measures on hold until the petition’s resolution.Banking

The case comes as the insurance industry implements new recapitalisation requirements under NIIRA 2025. While NICON Insurance and Nigeria Re maintain they have met all statutory obligations, their petition raises questions about NAICOM’s additional fee demands and escrow requirements.

The Finance Ministry’s intervention now compels NAICOM to provide legal justification for its actions while enforcement is suspended pending review.