NAICOM Reviews NAIC’s Shift to Agric Insurance After Recapitalisation Failure

News in Brief

— The National Insurance Commission (NAICOM) has withdrawn the Nigerian Agricultural Insurance Corporation's (NAIC) general insurance licence, limiting it to agricultural insurance only, after it failed to meet new capital requirements

— The move is part of a wider industry recapitalisation exercise that also saw Universal Insurance's licence revoked and two other insurers surrender their life insurance licences.

The Nigerian Agricultural Insurance Corporation (NAIC) has lost its general insurance licence after failing to meet the new minimum capital requirement under Nigeria's insurance recapitalisation exercise. However, its core job of insuring farmers against crop and livestock losses remains fully intact, the National Insurance Commission (NAICOM) has said.

NAIC Still Nigeria’s Agric Insurer

Commissioner for Insurance and NAICOM Chief Executive, Olusegun Omosehin, disclosed NAIC's new status during a media interactive session on developments in the insurance sector.

He noted the review as one of the notable outcomes of the just-concluded, year-long recapitalisation drive.

Omosehin explained that NAICOM withdrew only the general insurance licence added to NAIC's original mandate, not the agricultural insurance licence the corporation was set up to run by law.

He explained that the federal legislation creating NAIC to provide agricultural insurance schemes remains in force, and that the Federal Government would keep funding the scheme where shortfalls arise.

"That scheme is secure as long as the Federal Government of Nigeria exists, because it is the government's initiative," Omosehin said. "What we have withdrawn, however, is the general insurance licence that was added."

He disclosed that NAIC's exit from general insurance would not leave policyholders without cover, since other licensed insurers already have the capacity to absorb that segment of the market.

"NAIC leaving general insurance does not create a gap, because there are other entities that have been licensed to provide cover," he said.

The clarification matters for Nigerian farmers, who face recurring losses from floods, drought, pests and disease outbreaks. Agricultural insurance helps cushion such losses and is often tied to farmers' access to credit from banks and the Bank of Agriculture.

Recapitalisation Reshapes the Industry

NAIC's review is one of several outcomes of NAICOM's recapitalisation exercise, which required insurers to raise fresh capital or risk losing their licences. Omosehin said only two insurers, NSIA Insurance and Alliance and General Insurance, voluntarily surrendered specific licences, in both cases their life insurance business, after reassessing their capital-raising capacity.

NSIA Insurance's life portfolio, including assets and liabilities, is to be transferred to CHI Life, a process Omosehin said is progressing substantially, with NAICOM's no-objection already issued. Alliance and General Insurance's life portfolio transfer is still ongoing under the commission's supervision.

Omosehin said NAICOM remains open to new investors willing to fill market gaps but will not give out licences without due diligence.

NAIC’s Recapitalisation Failure Lesson

NAIC was established in 1987 and incorporated in 1988 as the Federal Government's sole dedicated agricultural insurer. Its mandate was to protect farmers' investments, encourage agricultural lending, and support national food security. Stakeholders have opined that this recapitalisation failure could indicate its dwindling ability to deliver on its directive.

Although industry experts have attributed its low impact on the agriculture industry to inadequate government funding, the corporation itself has been found wanting in several instances.

Beyond criticism of limited industry penetration, where many farmers are unaware of its existence, the Nigerian Senate also berated its lack of transparency, exposing about ₦3.87 billion in financial irregularities in a recent audit.

Stakeholders called on NAIC's leadership to see this new development as an opportunity to restrategise and refocus on its mandate to save Nigerian farmers from unforeseen perils which are becoming more common due to climate change effects.