*As insurance stakeholders anxiously await the gazetted copy of NIIRA 2025
WorldStage Newsonline (Abuja)– In a landmark shift in the Nigeria’s industrial sector, President Bola Tinubu recently assented to the Nigerian Insurance Industry Reform Act 2025 (NIIRA 2025) which many of the industry players have applauded as a significant legislation to strengthen Nigeria’s financial sector and accelerate the nation’s march toward a $1trillion economy.
The Insurance Industry Reform Act repeals and consolidates several outdated insurance laws into a single, modern legal framework. The new Act also provides for comprehensive regulation and supervision of all insurance and reinsurance businesses operating within Nigeria.
Introducing higher capital requirements, compulsory coverage mandates, and digitization targets to modernize the sector, the Act is believed will address the country’s problem of insurance penetration of less than 1%, which is among the lowest in Africa, far behind South Africa’s 13.7% and Kenya’s 2.14%, according to regulator data.
The low penetration becomes particularly worrisome given that Gross Premium Written reached $1.9 billion by the end of 2023 and is projected to hit $7.84 billion by year-end, attracting global insurers like Sanlam and Allianz betting on long-term growth.
The bill, before becoming an act, had stemmed from a need to modernize a fragmented and outdated legal framework to foster a robust, transparent, and globally competitive insurance sector vital for the nation’s economic aspirations, including the goal of a $1 trillion economy.
It repeals multiple old laws, introduces stringent capital requirements for operators, enforces compulsory insurance, aims to protect policyholders and promote good corporate governance, and moving the industry toward greater innovation and stability under the supervision of the National Insurance Commission (NAICOM).
NAICOM was established to play a pivotal role in shaping the development, stability, and credibility of Nigeria’s insurance industry. Entrusted with safeguarding public trust and national interest, it oversees a diverse array of operators including life, non-life, composite insurers, reinsurers, Takaful providers, microinsurance firms, insurtechs, brokers, loss adjusters, and web aggregators. These entities operate within a robust regulatory framework designed to promote transparency, accountability, and sector-wide resilience.
However, NAICOM, the apex regulatory authority in the insurance industry, has hitherto been laden with operational failures which include a history of delayed or insufficient action against insolvent insurance firms, a past lack of power to enforce discipline and punishment for misconduct, and shortcomings in protecting policyholders’ interests.
These issues have led to policyholder suffering due to company failures and have hindered the industry’s growth and competitiveness.
Also, NAICOM has specifically been criticized for being passive in protecting policyholders, often waiting for an insurance company to become completely defunct before taking action, as seen with cases like African Alliance and Standard Alliance Insurance.
In addition, the Commission has been flawed for inadequate enforcement powers. In the past, NAICOM lacked the authority to adequately enforce discipline and punish insurance firms or their managers for embezzlement and mismanagement of funds.
Beside this inadequacy, it has further been blamed for leaving a significant gap in protecting policyholders when an insurance company fails. The current Insurance Industry Reform Act 2025 introduces a policyholder protection fund to help address this in the future.
Prior to the 2025 reform, Nigeria’s insurance laws were outdated, hindering the industry’s growth, innovation, and ability to compete globally as a result of Industry-wide issues.
While not directly NAICOM’s failure, the commission has faced challenges in dealing with widespread issues like high rates of fraud (e.g., false claims, policy manipulation) within the industry that it regulates, leading to policyholder bearing the brunt of these failures and facing losses when insurance companies collapsed.
The challenges also hindered industry growth which have manifested in the regulatory inefficiencies and outdated laws that created an environment that stifled the insurance industry’s progress and global competitiveness.
The Insurance Industry Reform Act 2025 was signed to overhaul the obsolete laws and address many of these historical regulatory shortcomings. The new law is expected to empower NAICOM with strengthened regulations and greater authority to address issues within the industry, promoting a healthier and more effective insurance sector.
According to Mr. Bayo Onanuga, Special Adviser to the President on Information & Strategy, in a statement issued on President Tinubu’s assent, the Act repeals multiple old laws, introduces stringent capital requirements for operators, enforces compulsory insurance, and aims to protect policyholders and promote good corporate governance, moving the industry toward greater innovation and stability under the supervision of NAICOM.
Reactions to the insurance Act have been largely positive, with stakeholders welcoming the landmark legislation as a crucial step toward modernizing the insurance sector. Key provisions of the Act praised include increased capital requirements, enhanced consumer protection, the promotion of digital innovation, and stricter rules against delayed claims.
The reform is seen as a significant driver for financial stability, economic growth, and achieving the government’s goal of a $1 trillion economy, aligning with the Renewed Hope Agenda.
Applauding the president’s assent, NAICOM, through its Commissioner/Chief Executive Officer, Mr. Olusegun Ayo Omosehin, described it as charting a new course for the Nigerian insurance sector, saying “In alignment with the Federal Government’s strategic vision for a $1 trillion economy, the enactment of the Nigeria Insurance Industry Reform Act (NIIRA) 2025 marks a transformative milestone. This landmark legislation consolidates prior insurance laws into a unified framework, modernizing regulatory oversight and positioning the industry for sustainable growth, innovation, and inclusivity.”
The Commission restated its commitment to aligning Nigeria’s insurance sector with global best practices and sustainable development goals. “By embedding ESG (Environmental, Social, and Governance) principles, advancing risk-based supervision, and leveraging data-driven insights, the Commission is laying the foundation for a resilient, inclusive, and future-ready insurance industry that contributes meaningfully to national prosperity,” it assured.
NAICOM admitted that the signing of the Insurance Reform Act into law is a significant triumph for Nigeria’s insurance industry, noting that after years of operating with rigid and weak framework laws that failed to keep pace with the country’s evolving economic landscape, the industry is finally poised for transformation. “The insurance industry has had to wait nearly two decades for this critical reform,” it pointed out.
While the apex regulator of the insurance industry awaits the gazetted copy of the NIIRA 2025, almost all stakeholders are optimistic that insurance in Nigeria will experience remarkable transformation.
Speaking in an interview on the Act, Dr. Biodun Adedipe an economist and Founder of Biodun Adedipe Associates Consult, stated that the NIIRA 2025 marks a new dawn for significant changes in the insurance industry, with amendments to segments of the law that existed for about 45 years.
He said, “Apart from the fact that the new ACT now provides the requirement for recapitalization, there are other areas that will experience changes with insurance penetration. Off course, if insurance is deepened, it will have implications for investments in the real sector because the essence of insurance is to cover risks. This is because there is an underwriter that is ready to hold you when you fall.”
For Mrs. Yetunde Ilori, the President and Chairman of Council of the Chartered Institute of Insurance in Nigeria (CIIN), the NIIRA 2025 will transform the financial sector landscape as insurance is the backbone of any economy.
According to her, the Act will bring dynamism and efficiency to an industry that has been operating under a law that lasted for 22 years. She believed an industry-led approach for creating awareness on the need to insure assets across the country is pivotal to its growth and contribution to the economy.
She said, “It is not just enough for the government to assent to the NIIRA 2025, but lay the example by ensuring all government assets are insured. This will lead to the transformation that all stakeholders are expecting in the industry. One of the good things in the Act is that the capital has been raised for the various segments from General, Life and Re-insurance. We are likely going to see mergers and acquisitions, while compliance is expected to improve with NAICOM at the helm.”
Another key player in the insurance sector, Mr. Odion Aleobua, asserted that the NIIRA 2025 presents a significant opportunity to reposition the insurance sector as a key driver of economic growth, enhance its contribution to Nigeria’s GDP, and integrate the vast informal sector into the financial protection system.
Aleboua said, “Achieving these goals will require a strategic use of technology, more robust regulatory enforcement, and a shift in the market towards innovation and inclusivity. Insurers must effectively compete in today’s dynamic marketplace by leveraging technology to enhance customer acquisition and engagement, streamline processes, optimize operations, expedite claims processing, and embed innovation throughout their operations.”
It will be recalled that at the 2023 annual conference of the National Insurance Commission (NAICOM), Mr. Tony .O. Elumelu, Chairman of Heirs Insurance Group, advocated for the recapitalization of the industry and compliance enforcement.
He had then stated, “We must ensure that the sector has the financial muscle and backbone to handle more complex insurance transactions whilst extending reach. That is the only way the industry can scale and expand operations out of Nigeria and into Africa.”
As Nigerians welcome the NIIRA 2025 as marking a new chapter for the Nigerian industry and await the gazetted copy from NAICOM which will serve as a guide for implementation, it is expected that an industry-led approach will be adopted to achieve the gains of what promises to be a game-changing legislation for insurance in the country.
