The National Insurance Commission (NAICOM) has issued a landmark directive to reinforce compliance with local content laws in Nigeria’s insurance sector. This move aims to prioritize domestic capacity in insurance and reinsurance placements before considering offshore options, bolstering the competitiveness of local operators.

Highlights of the Circular

Circular Reference: NAICOM/18R/53/2024
Subject: Exhaustion/Utilization of Local Content Capacity Prior to Any Offshore/Overseas Insurance/Reinsurance Placement

NAICOM raised concerns about practices that undermine local content regulations, depriving Nigerian insurers and reinsurers of opportunities. The Commission emphasized that such violations go against statutory requirements and regulatory guidelines.

Key Provisions

1. Mandatory Local Content Utilization:
   • All insurance and reinsurance businesses must fully utilize the capacity of local Nigerian insurers and reinsurers before considering offshore placements.
2. Prohibition of Unauthorized Practices:
   • Companies must not engage with foreign insurers or reinsurers without prior consultation and approval from NAICOM. Violations will attract strict penalties.
3. NAICOM’s Exclusive Authority:
   • The Commission maintains sole discretion to determine which regulated entities can participate in reinsurance activities, including oversight of required Financial Strength Ratings for foreign reinsurers.
4. Penalties for Non-Compliance:
   • Violators will face severe sanctions and other regulatory consequences. NAICOM has reaffirmed its zero-tolerance stance on breaches of local content laws.
5. Approval for Offshore Placements:
   • Companies seeking to place insurance or reinsurance business offshore must obtain express approval from NAICOM to ensure alignment with local content requirements.

Industry Implications

This directive underscores NAICOM’s commitment to fostering local capacity development and ensuring the growth of Nigeria’s insurance market. By mandating the exhaustion of local options, the policy strengthens domestic players and promotes the sector’s overall competitiveness.

Official Statement

Signed by A.J. Adamu, the Director of Innovation and Regulation, on behalf of the Commissioner for Insurance, the circular reinforced NAICOM’s zero-tolerance approach to violations of local content laws. The Commission warned of stringent regulatory actions for non-compliance.

Call to Action

NAICOM has urged all stakeholders, including insurers, reinsurers, and brokers, to comply with these directives to promote the development of Nigeria’s insurance industry and uphold local content laws.

For further information, contact NAICOM via:

• Email: info@naicom.gov.ng, contact@naicom.gov.ng
• Phone: 08172047735
• Website: www.naicom.gov.ng

By strengthening local content enforcement, NAICOM takes a decisive step toward securing the future of Nigeria’s insurance sector and fostering sustainable growth within the domestic market.