Ex-NAICOM chief warns Nigeria against political override of insurer recapitalisation
A former head of Nigeria's insurance regulator has publicly urged the finance ministry not to intervene in NAICOM's enforcement of capital rules, arguing that political concessions to two state-linked insurers would erode investor confidence in the country's broader financial reform agenda.
Mohammed Kari, who led Nigeria's insurance regulator NAICOM and later ran both NICON Insurance and Nigeria Reinsurance Corporation, published an open letter to the finance minister on August 12 warning that government interference in the ongoing insurance recapitalisation would damage the credibility of the entire reform programme.
The letter targets petitions filed by NICON Insurance and Nigeria Re with the Ministry of Finance seeking relief from NAICOM's regulatory demands under the Nigerian Insurance Industry Reform Act 2025, including capital verification, escrow requirements and recapitalisation deadlines.
Kari's core argument is structural. NIIRA 2025 assigns enforcement authority to NAICOM, specifically under Sections 8(6) and 8(9), and does not grant the finance ministry an appellate role. If the ministry steps in, he contends, regulatory decisions become political negotiations rather than rule-based determinations.
More than 90 percent of licensed insurers have already completed the recapitalisation process, raising fresh capital, depositing reserves with the Central Bank of Nigeria, undergoing verification and paying regulatory fees. Kari says granting exemptions to two operators through ministerial channels would punish compliant firms and create an artificial cost advantage for those that sought political shortcuts.
A question of regulatory credibility
The warning carries weight because Kari sat on both sides of the table. He headed NAICOM as commissioner and subsequently managed the two companies now seeking relief, giving him direct knowledge of their operations and regulatory history.
He acknowledges that NICON, founded in 1969, and Nigeria Re, established in 1977, once anchored Nigeria's underwriting and reinsurance capacity and trained generations of professionals across West Africa. Both were privatised in the mid-2000s, after which they experienced governance failures, balance-sheet deterioration and interventions by NAICOM and the Asset Management Corporation of Nigeria.
Kari's position is that historical significance cannot justify a permanent regulatory exemption. He also rejects a systemic-risk rationale for intervention, noting that both institutions have lost substantial market share and no longer hold the footprint that would make their failure a threat to the wider financial system.
Implications beyond insurance
The dispute touches a sensitive nerve for investors assessing Nigeria's reform trajectory. Kari draws a parallel with banking and pensions, where operators accept that the Central Bank of Nigeria and the National Pension Commission enforce prudential standards without ministry arbitration. Allowing insurance companies to bypass NAICOM, he warns, would introduce regulatory arbitrage into a sector the government is trying to strengthen.
He identifies four consequences of political intervention: distorted competition, weakened incentives for genuine capital formation, reduced investor confidence and heightened risk to policyholders.
An industry commentator described Kari as occupying "an amazingly unique position" given his history with both institutions, adding: "A strong and well written letter. Let's see what Jimoh Ibrahim's benefactors cook up. We wait in renewed hope that PBAT's reform agenda will not be selective in application."
For market participants, the episode is a test of whether Nigeria's financial-sector reforms will be applied uniformly or bent for connected operators. The recapitalisation is designed to produce insurers capable of absorbing losses, paying claims and mobilising long-term capital for infrastructure. If capital thresholds can be negotiated away through a ministerial petition, the pricing of regulatory risk across the sector shifts, and the signal to both domestic and foreign investors is that compliance is optional for those with sufficient political access.
The finance ministry has not publicly responded to the letter.
