NAICOM Clears Air On Escrow Dispute, Insists On Transparency, Compliance with Guidelines

By LOVETH-AZODO CHIJIOKE, Lagos.

The National Insurance Commission (NAICOM) has moved to clarify the controversy surrounding the escrow account requirement under the ongoing insurance industry recapitalisation exercise, insisting that the process is designed to ensure transparency, proper verification of funds and strict compliance with regulatory guidelines.

The Commissioner for Insurance and Chief Executive Officer of NAICOM, Olusegun Omosehin, said the commission would follow the established guidelines to the end, including provisions requiring recapitalisation funds deposited with the Central Bank of Nigeria (CBN) to be returned to operators after the necessary verification process.

Omosehin also assured policyholders that no subscriber would be allowed to suffer financial loss or be abandoned as a result of the recapitalisation exercise.

Speaking at a NAICOM Media Interactive Session on Developments in the Nigerian Insurance Sector recently held in Lagos, the commissioner said the protection of policyholders remained the commission’s primary responsibility even as it enforces compliance with the statutory capital requirements.

“One word I will give you is, no policyholder will be allowed to suffer in this process,” Omosehin declared.

He explained that the escrow arrangement was not introduced arbitrarily, stressing that it enables the regulator to properly examine the source and movement of funds committed by operators to the recapitalisation exercise.

According to him, the arrangement also allows NAICOM to determine whether the funds meet applicable anti-money laundering and counter-terrorist financing (AML/CFT) requirements.

“There are two reasons for the escrow account: it allows for proper review of that money, the flow of money, the source of money, and whether it meets the AML/CFT requirements,” he said.

Omosehin maintained that operators participating in the recapitalisation exercise were expected to comply with the same process, noting that companies that had raised funds had moved the money into the designated escrow arrangement for verification.

He stressed that NAICOM’s position was not aimed at withholding operators’ funds, but at ensuring that capital being presented for regulatory approval was properly established and verified.

The commissioner further stated that the commission would adhere to the guidelines governing the exercise, including the provision for funds to be retired back to the operators after the prescribed process.

He also disclosed that the recapitalisation funds deposited with the CBN would be made available to the insurance companies before September 30, 2026, reinforcing the commission’s position that the escrow arrangement was part of the verification process rather than a permanent transfer of operators’ capital.

The clarification comes against the backdrop of objections raised by NICON Insurance Limited and Nigeria Reinsurance Corporation over aspects of NAICOM’s recapitalisation requirements, particularly the directive concerning the transfer of capital raised into an escrow account.

The two companies have maintained that they had injected substantial funds towards meeting the new capital requirements and questioned the regulatory basis for transferring the entire capital injection into the escrow arrangement.

NAICOM, however, has maintained that recapitalisation compliance goes beyond the mere availability of funds and includes the regulatory verification process prescribed for determining whether the capital meets the required standards.

Omosehin said the commission would not witch-hunt any operator, stressing that NAICOM’s responsibility was to protect policyholders and ensure that insurance companies operate within established regulatory guidelines.

He likened the regulatory process to established rules that all operators are expected to follow, regardless of their size or status.

The commissioner’s position effectively places the escrow controversy within the broader framework of NAICOM’s efforts to ensure that the recapitalisation exercise produces not only adequately capitalised insurers but also a more transparent and resilient industry.

The recapitalisation exercise, which introduced higher minimum capital requirements for insurance companies, is intended to strengthen the financial capacity of operators and improve their ability to meet obligations to policyholders.

As the commission continues the verification process, the handling of funds placed under the escrow arrangement and their eventual return to compliant operators is expected to remain a key point of interest among industry stakeholders.