The Institute of Islamic Finance Professionals (IIFP) has faulted the National Insurance Commission (NAICOM) over its circular prohibiting coinsurance arrangements between Takaful Operators and Conventional Insurance Companies.
In a joint statement signed by IIFP President, Prof. Tajudeen Yusuf, and Acting Registrar, Monsur Musa, the institute described the policy as a setback to financial inclusion and insurance market expansion in Nigeria.
The statement noted that Nigeria’s insurance penetration remains among the lowest globally and that Takaful was specifically introduced to reach underserved populations excluded by religious or ethical concerns. It said the new directive would create unnecessary barriers that limit customer choice, weaken competition, and constrain access to insurance coverage.
“While we acknowledge NAICOM’s mandate to regulate and protect the integrity of the insurance sector, the rationale behind this circular raises serious concerns for market development and inclusion,” the statement read.
The institute argued that the prohibition contradicts Nigeria’s financial inclusion strategy and the United Nations Sustainable Development Goals, stressing that interoperability between Islamic and conventional institutions is both possible and beneficial, as seen in the banking sector under the Central Bank of Nigeria (CBN).
“If the CBN were to forbid conventional banks from dealing with clients who operate non-interest accounts, it would cripple financial inclusion,” the IIFP stated. “The same logic applies here. Instead of building bridges, this circular builds silos.”
The IIFP added that NAICOM’s justifications citing “integrity,” “systemic risk,” and “reputational harm” were unconvincing, noting that such risks can be managed through sound governance, disclosure, and Shariah compliance review rather than total prohibition.
It concluded that the circular lacked empirical evidence of operational conflict and urged NAICOM to reconsider its position to avoid stifling innovation and growth in the insurance industry.
