Ex-NAICOM Boss Warns FG Against Post-Recapitalisation Intervention

By Adedapo Adesanya

A former Commissioner for Insurance of the National Insurance Commission (NAICOM), Mr Mohamed Kari, has warned the federal government to reduce its intervention in the sector’s post-recapitalisation process.

He charged the Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele, to ignore calls for regulatory concessions in the just-concluded insurance industry recapitalisation exercise in the country.

The call, he said, was 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). However, NICON Insurance and Nigeria Re, in a recent 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.

Mr Kari, who was also a former chief executive of NICON Insurance and Nigeria Re, said it was 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.

“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,” he said.

He warned that 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?

“Rescuing or granting regulatory concessions to insignificant, chronic defaulters cannot be justified under any sound macroeconomic policy,” he added.

“When political intervention steps in to shield such non-systemic entities from standard regulatory checks, the equilibrium of the market breaks down as it creates unfair advantage.

“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.”

He noted that if such a concession is granted to both insurance industry players in the defunct, it “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.”