INTRODUCTION
On the 5th of August 2025, President Bola Ahmed Tinubu assented to the Nigerian Insurance Industry Reform Bill, 2025, a landmark legislation designed to strengthen Nigeria’s financial sector and accelerate the nation’s progress towards achieving a $1 trillion economy.
The Nigerian insurance industry is on the verge of a significant transformation with the Promulgation of the Nigerian Insurance Industry Reform Act (NIIRA) 2025 (“the Act”). This landmark legislation replaces and consolidates the Insurance Act, 2003 (Cap I17, Laws of the Federation of Nigeria 2004) and other outdated provisions into a single, modern framework designed to strengthen regulation, enhance market confidence, and align the sector with global best practices. The Act introduces far-reaching measures such as compulsory insurance coverage across critical sectors, stricter licensing requirements for agents, increased minimum capital thresholds to ensure financial stability, and robust enforcement Measures to address unlicensed operations and delays in claims settlement.
By addressing long-standing regulatory gaps and operational inefficiencies, the reforms aim to deepen insurance penetration, protect policyholders, and foster a more competitive market. These changes are expected to not only reposition the insurance sector as a key driver of Nigeria’s financial system but also contribute meaningfully to the government’s ambition of building a $1 trillion economy.
This article seeks to highlight the key provisions of the Act with a view to emphasizing the significance of the Act on the insurance industry, as well as the opportunities and risks inherent in the introduction of the Act.
BACKGROUND AND RATIONALE
Nigeria’s insurance industry has long struggled to fulfil its potential, hampered by outdated legislation, low public trust, and one of the lowest penetration rates on the continent. The Insurance Act of 2003, while an important milestone at the time, failed to keep pace with the realities of a changing economy, emerging risks, and the need for deeper consumer engagement as a result, the sector has remained underdeveloped, contributing less than 0.5% to GDP well below peers such as South Africa, Morocco, and Kenya. Weak consumer awareness, slow claims processes, and limited regulatory enforcement have reinforced public skepticism.
In recent years, however, industry has shown signs of growth. At the 54th Annual General Meeting of the Nigerian Insurers Association (NIA), it was disclosed that insurance companies in Nigeria recorded gross written premiums of ₦1.562 trillion (approximately $1 billion) in 2024, representing a 56% growth compared to the previous year.
However, Regulators and market stakeholders have identified capital adequacy as a central challenge. Many insurers lack the financial depth to underwrite large risks or respond effectively to macroeconomic shocks. As industry analysts note, a well-capitalized insurance sector not only boosts public confidence but also enables and contributes to economic stability. This understanding has informed the renewed legislative push to strengthen the industry’s regulatory framework.
The new Insurance Act is an ambitious reform by Nigeria that modernizes market oversight, raises prudential standards, promotes competition, and expands access through digital and inclusive models. Aligned with Nigeria’s march towards a $1 trillion economy goal, the Act seeks to build a more transparent and resilient insurance sector capable of mobilizing long-term capital, protecting assets, and driving sustainable economic growth.
KEY CHANGES
This section outlines the major provisions of the Act, highlighting the changes that will shape operational requirements for insurers and the significance of these changes to the industry and relevant stakeholders. The key changes in the Act are as follows:
- Licensing and operation of insurer
The Act introduces a more structured and transparent framework for licensing insurers and reinsurers. Under the new regime, no individual or entity may commence or continue the business of insurance, reinsurance, or related activities in Nigeria without first obtaining a license from the National Insurance Commission (NAICOM).
The Act provides that Applications must be made in a prescribed form and accompanied by all supporting documents required by the Commission. Importantly, eligibility for licensing is now clearly defined. Only companies incorporated under Nigerian law as limited liability companies under the Companies and Allied Matters Act 2020 or established under another Nigerian statute can be licensed. In addition, applicants must maintain the prescribed minimum capital, make and maintain a statutory deposit with the Central Bank of Nigeria, and meet all other requirements set by NAICOM. These additional requirements now include the submission of a business plan that identifies the specific niche market the applicant intends to serve.
Another notable introduction under the Act is the requirement for NAICOM to publish a Service Charter. This document must set out the Commission’s products and services, the complete list of requirements for obtaining each one, the applicable fees, timelines for processing, and all supporting processes and documentation. By institutionalizing this Service Charter, the Act seeks to improve transparency, reduce regulatory uncertainty… (continue reading or download pdf)
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