Majority of insurers will fail new capital adequacy requirements

Given the size of the Nigerian economy, it is somewhat surprising that other African countries such as Namibia, Botswana and Egypt have better performance in terms of insurance penetration. But, according to some observers, this indicates that there is significant potential for the future expansion of the market given the right operating environment

The number of insurance companies in the Nigerian market continues to remain very high for the size of the industry. The Ministry of Finance has advised that new, substantially increased capital requirements will have to be in place at the latest by February 28, 2007. Market sources have predicted that in excess of 70% of insurers, in their current form, will be unable to comply with the new requirements. Should the deadline be enforced, large numbers of insurers will be merging, participating in acquisitions and if necessary filing for self-liquidation.