Nigerian insurance operators are bracing for a ripple effect from the ongoing US/Israeli attacks on Iran, with higher reinsurance rates expected during the next renewal period, according to Ayo Olusegun Omosehin, the Commissioner for Insurance.
At a recent press briefing in Lagos, Omosehin explained that insurance is a global business, where risk is shared between local and international reinsurers. He warned that the massive destruction of oil facilities and infrastructure in Iran could drive up global reinsurance costs, which would inevitably affect Nigerian insurers who rely heavily on foreign coverage.
Why Nigerian Insurers Feel the Heat
Most Nigerian insurance firms cede high-capacity and complex risks abroad to international reinsurance giants such as:
- Swiss Reinsurance Ltd
- Munich Reinsurance
- Lloyd’s of London
- Allianz
- AXA
- GIC Re of India
These international reinsurers determine premium rates and claims frequency, often influenced by catastrophic events globally. As a result, Nigerian underwriters covering high-tech, energy, aviation, cybersecurity, and digital infrastructure risks abroad may face steeper rates when renewing policies.
Local Content Law vs. Global Risks
While Nigerian insurers are required to feed local insurance and reinsurance firms first under the federal government’s local content law, many high-capacity or emerging risks—like oil & gas, technology, and aviation—must be reinsured internationally because the local market lacks the capacity to underwrite them.
The ongoing conflict in Iran, which has caused massive destruction of oil installations, is expected to flood the global reinsurance market with claims, leading to higher premiums for insurers worldwide, including Nigeria.
NAICOM Reassures Policyholders
Despite looming rate increases, NAICOM assured Nigerians that policyholders will not suffer losses due to ongoing sector reforms and recapitalisation efforts. Omosehin emphasized that the recapitalisation program, with a deadline of July 31, is designed to:
- Strengthen insurers’ capital base
- Improve claims settlement capacity
- Enable underwriting of larger, complex risks
- Build a resilient and modern insurance sector aligned with global best practices
“Our primary responsibility is to protect policyholders. No Nigerian who has entrusted resources to insurance companies will suffer because of the recapitalisation process,” Omosehin stated.
Regulatory safeguards are in place to ensure the interests of policyholders are fully protected throughout the transition.
Looking Ahead
The ongoing conflict serves as a stark reminder that global events can have direct consequences on local insurance markets. While Nigerian insurers may face higher reinsurance costs, NAICOM’s reforms and recapitalisation efforts aim to strengthen the sector, maintain policyholder protection, and restore public trust in the insurance industry.
