Recapitalisation to redefine competition, risk capacity in insurance industry – Okeahialam

Recapitalisation is set to reshape the competitive landscape of Nigeria’s insurance industry, redefining how risks are underwritten and how trust is built with policyholders.

Idu Okeahialam, group managing director/CEO, Royal Exchange Plc, said as insurers race to meet new minimum capital requirements ahead of 2026, the reform is emerging not just as a regulatory hurdle but as a decisive test of financial strength, governance, and long-term relevance.

Corroborating Okeahialam, industry leaders have said the success or failure of recapitalisation will determine which companies can absorb complex risks, settle claims promptly, and position themselves as credible partners in Nigeria’s broader economic growth agenda.

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Okeahialam in a statement with the theme: ‘Recapitalisation And The Future Of The Nigerian Insurance Market: A 2026 Outlook’, maintained that a well-capitalised insurance industry sends a strong signal of financial strength and reliability, which is essential in rebuilding trust among policyholders.

“In 2026, trust will increasingly become a competitive differentiator. By the end of 2026, despite the threat in the recapitalisation, the trajectory of the Nigerian insurance industry will be determined by how effectively it is implemented. Insurers that leverage strengthened capital, adopt robust governance, and embrace risk-based strategies will emerge as market leaders, capable of underwriting complex risks, delivering timely claims, and restoring public confidence. Conversely, institutions that fail to adapt will struggle to remain relevant.”

Okeahialam insisted that while recapitalisation is challenging, it provides a unique opportunity to transform the insurance industry into a resilient and trustworthy sector, one that can support economic growth, attract investment and play a central role in the nation’s $1 trillion economy goal.

“While the sector has long grappled with issues of inadequate capital, leading to poor claims settlement capacity and limited market penetration, limited underwriting capacity, and trust deficit, the ongoing recapitalisation drive has emerged as the most consequential reform shaping its future direction. It is intended that insurers must meet the new minimum capital requirement, aimed at protecting the consumers and positioning the industry for sustainable growth.”

She insisted that recapitalisation is not merely a regulatory requirement but a structural reset that will determine the credibility and long-term relevance of the industry.

“By 2026, recapitalisation will have reshaped the competitive landscape. The industry is likely to witness a leaner but stronger market, characterised by fewer operators with improved financial capacity, stronger governance frameworks, and enhanced risk management practices. Insurers that emerge successfully from the recapitalisation process will be better equipped to absorb shocks, support national economic activities, and partner meaningfully in other high value sectors.”

She warned however, that recapitalisation will not be without challenges.

“While the objectives outlined in the Act are commendable, the increased capital requirements may pose significant challenges for smaller players, potentially leading to market consolidation and reduced competition. While this may initially be disruptive, I believe it will ultimately strengthen the industry by eliminating weak structures and encouraging scale and efficiency.”

Read also: Universal Insurance to raise N15bn to meet capital rules

The Royal Exchange CEO added that recapitalisation must go beyond balance sheet expansion as capital alone does not guarantee stability or performance.

“The true test for insurers in 2026 will be measured by the effective deployment of capital, whether it translates into prudent underwriting, timely claims settlement, and improved customer experience. Without corresponding improvements in governance, and enterprise risk management, recapitalisation risks becoming a cosmetic exercise rather than a transformative one. From a market confidence perspective, successful recapitalisation as proposed by the Act has the potential to significantly improve public perception of insurance in Nigeria.”

Modestus Anaesoronye is a leading Nigerian financial journalist with over two decades of experience reporting on the insurance and pension sectors across Nigeria and West Africa. He has held key editorial positions at major national media outlets, including The Comet, The Nation, and Financial Standard, and currently serves as a Senior Financial Analyst at BusinessDay Media Ltd.

A widely travelled reporter, he has covered industry developments in more than 14 countries across Africa and Asia.

Anaesoronye is a multiple award-winning journalist, honoured several times as Insurance Journalist of the Year and Pension Journalist of the Year by recognised industry bodies, including PensionScope and the Pension Fund Operators Association of Nigeria (PenOp), among others.

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