RECAPITALISATION : REGULATORY CONCESSIONS TO CHRONIC DEFAULTERS UNJUSTIFIABLE UNDER SOUND MACROECONOMIC POLICY — Kari
The former commissioner for Insurance/CEO, National Insurance Commission(NAICOM), Alhaji Mohamed Kari has charged the Minister of Finance and Coordinating Minister of the Economy, Mr. Taiwo Oyedele to ignore calls for regulatory concessions in the midst of the just concluded insurance industry recapitalisation exercise in the country.
The call, he said, is critical, especially, when the companies clamouring for such concessions were chronic defaulters whose failure or strict regulatory discipline poses absolutely zero systemic risk to the Nigerian financial system or the broader economy.
Recall that NAICOM had requested insurance companies, as part of the recapitalisation process, to transfer their entire recapitalisation funds into an escrow account with the Central Bank of Nigeria (CBN), a move that NICON Insurance and Nigeria Reinsurance Corporation are challenging in court.
NICON and Nigeria Re, in its July 27, 2026 petition, had petitioned NAICOM over what they described as unlawful fees and regulatory demands arising from the implementation of the Nigerian Insurance Industry Reform Act (NIIRA) 2025.
The firms, through, their lawyers, wrote the Ministry of Finance to also mandate NAICOM to suspend its demand that both companies transfer their entire recapitalisation funds into an escrow account with the CBN) pending the determination of a petition challenging the legality of the charges and directive.
To this end, Kari, who was also a former MD/CEO of NICON Insurance and Nigeria Re, said, it is globally accepted that a government may occasionally intervene to rescue or support a consequential player in the financial sector, strictly where its distress poses a genuine ‘too big to fail’ systemic risk whose collapse would trigger a wider economic catastrophe.
Kari, who is the current Wazirin Bauchi, said: “However, one must examine the reality of the two institutions in question today. These are no longer the market giants they once were decades ago. Having suffered years of steep decline, loss of market share, and severe operational shrinkage, their current market footprint is virtually insignificant.
“Their failure or strict regulatory discipline poses absolutely zero systemic risk to the Nigerian financial system or the broader economy.”
Why then should government intervene to shield operators whose distress carries no systemic consequence whatsoever, he queried, saying, rescuing or granting regulatory concessions to insignificant, chronic defaulters cannot be justified under any sound macroeconomic policy.
When political intervention steps in to shield such non-systemic entities from standard regulatory checks, he noted that, the equilibrium of the market breaks down as it creates unfair advantage.
To him, “operators that meet compliance targets, carry the full cost of regulatory fidelity, while non-compliant firms that secure political exemptions operate with an artificial cost advantage.
“It disincentivises real capacity building: When political lobbying becomes an alternative to recapitalisation, companies are discouraged from making the hard structural choices necessary to refine their balance sheets and operations.”
Saying such concession, if granted to both insurance industry players in defunct, “distorts investor confidence: Both domestic and international investors look for predictable, transparent environments. A playing field where rules can be bent for select players frightens away patient capital.
It weakens policyholder protection. ”
Regulatory standards, he stressed, exist primarily to guarantee that when disaster strikes, claims are paid promptly, adding that, shielding insolvent entities directly exposes policyholders to unmitigated risk.
Advising the minister, he noted that, Nigeria’s insurance sector has enormous untapped potential, but it can only realise that potential if the government allows a level playing field to flourish.
“The Federal Government must resist the urge to grant special carve-outs or act as an informal court of appeal for failing operators. NAICOM is the state’s empowered regulator; it must be permitted to apply the law equally to every company, whether privately owned, historically state-created, or under asset management control.
“I trust that it is through this uncompromising stance that the Federal Ministry of Finance, which bears the ultimate responsibility for managing Nigeria’s economy, will give the right impression to investors, insurers, and reinsurers the world over.
“By upholding regulatory integrity and refusing to shield non-compliant operators, your Ministry will demonstrate that Nigeria is serious about financial discipline, thereby building lasting global confidence in the Nigerian insurance sector, ” he emphasised in his Open Letter to the Minister of Finance.
