67 Insurers, Reinsurers Get June 30th Annual Deadline To Remit Into Policyholders Protection Fund
… As NAICOM Stipulates N5bn Capitalisation For Fund Managers
No fewer than 67 insurance and reinsurance companies in Nigeria must, on a yearly basis, contribute 0.25% of their respective gross premium income into the newly created Insurance Policyholders Protection Fund, NEWSEXTRA learnt.
The affected companies comprise 12 composite insurance firms, 27 Non-life companies, 13 Life companies, 3 reinsurers, 8 microinsurance entities and 4 takaful companies.
This is even as the National Insurance Commission (NAICOM) has mandated the Fund managers to have at least a minimum capital of N5 billion to manage the Fund.
In a guideline issued recently by the National Insurance Commission (NAICOM), it directed operators to pay into the Fund’s designated accounts with deposit money banks not later than June 30 of each year, based on the Audited or Management Financial Statement as at December 31 of the year preceding the assessment.
An assessment, NAICOM said, shall be carried out using Management Financial Statements and the payments made based on such assessments shall be considered provisional.
The regulatory body added that, upon confirmation of the final amount due from Audited Financial Statements: where there is a shortfall, the outstanding balance shall be paid within 10 working days of receiving the final assessment; where there is an overpayment, a Credit Note shall be issued for the overpayment, and the excess amount shall be deducted from the contribution due in the subsequent year.
“The formula for computation of the annual contribution by an insurer/reinsurer shall be: 0.25% × Net Premium Income (NPI). For the year 2025, the pro-rated contribution shall be paid by an insurer/reinsurer. The prorated contribution shall be equal to: Annual Contribution × (Number of days from July 31 to December 31, 2025 / 365).
“Failure by any insurer or reinsurer to remit the full amount of its assessed contribution to the Insurance Policyholders’ Protection Fund within the stipulated timeframe shall constitute a ground for suspension or cancellation of its operating licence by the Commission,” NAICOM warned.
For the purpose of making contributions to the Fund by an insurer or reinsurer, the regulator noted that the Net Premium Income (NPI) shall be determined as gross written premium less brokerage commission for the immediate preceding year.
It added that the Fund shall be managed independently by a competent Fund Manager appointed by the Commission.
Stating that the Fund shall be held in Deposit Money Banks licensed by the Central Bank of Nigeria (CBN) and rated not below investment grade, NAICOM emphasised that one of the selection criteria for the Fund Manager is a minimum paid-up capital of N5 billion, as well as Securities and Exchange Commission (SEC) registration as a Fund/Portfolio Manager with audited financials for the past three years, among others.
NAICOM further stressed that the Fund Manager shall provide quarterly reports, annual audits and stress testing results to relevant stakeholders as may be required by the Commission.
The Fund Manager shall submit quarterly performance reports, annual audited financial statements and stress testing results to the Committee, which will thereafter vet and submit same to the Commission not later than 15 days and three months from the end of the quarter and year, respectively.
The Fund will be used for the purpose of resolving distress and insolvencies of licensed insurers or reinsurers and payment of claims admitted by or allowed against a licensed insurer or reinsurer which remains unpaid by reason of insolvency or cancellation of the licence of the insurer or reinsurer.
According to NAICOM, “the objectives of these guidelines are to: ensure protection of policyholders and beneficiaries covered under an insurance policy; ensure timely and accurate collection of contributions to the Fund; establish sound management and investment practices for the Fund; provide procedures for disbursement and recovery of loans from the Fund; and promote transparency, accountability and governance in the administration of the Fund.”
