President Bola Tinubu has officially signed the Insurance Industry Reform Bill 2025 into law, signaling a major transformation for the insurance sector in Nigeria.
According to Daily Trust, presidential spokesman Bayo Onanuga stated that the newly enacted NIIRA Act 2025 marks a turning point for the industry by promoting greater transparency, fostering innovation, and enhancing Nigeria’s competitiveness on the global stage. This development is aligned with the Federal Government’s broader goal of building a \$1 trillion economy.
The Act introduces several important measures including stricter capital requirements to ensure the financial stability of insurance operators, mandatory insurance policies to protect consumers, and the digitisation of insurance services aimed at improving market access and operational efficiency. It also establishes zero tolerance for delays in claims processing, sets up policyholder protection funds to shield consumers in cases of insurer insolvency, and encourages greater involvement in regional insurance initiatives such as the ECOWAS Brown Card System.
The National Insurance Commission (NAICOM) has been tasked with enforcing the provisions of the new law to unlock the full potential of Nigeria’s insurance industry and to boost insurance penetration nationwide.
Industry insiders believe the reforms will attract new investments, increase consumer trust, and position Nigeria as a key insurance hub across Africa.
Following the signing of the new legislation, the insurance sector is expected to undergo a fresh round of recapitalisation. The NIIRA Act 2025 replaces several outdated insurance laws with a comprehensive, modern regulatory framework for all insurance and reinsurance companies operating in Nigeria.
The last recapitalisation occurred in 2007, with minimum capital requirements set at N2 billion for life insurers, N3 billion for general insurers, N5 billion for composite firms, and N10 billion for reinsurance companies. Efforts to increase these capital thresholds in recent years faced delays due to legal challenges from stakeholders.
The new law raises the minimum capital requirements significantly: non-life insurers must now hold at least N15 billion (up from N3 billion), life insurers N10 billion (up from N3 billion), and reinsurers N35 billion (up from N10 billion). Section 15 of the Act specifies that no insurance business may operate in Nigeria unless these capital requirements or higher risk-based capital levels set by NAICOM are met.
This increase is driven by factors such as currency depreciation, inflation, changes in capital structure as outlined by the Finance Act 2022, and the need to remain competitive in both international markets and the African Continental Free Trade Area (AfCFTA).
Insurance expert Musa Bawa told Daily Trust that the recapitalisation initiative is expected to stimulate growth in insurance stocks and enhance trading activity on the Nigerian Stock Exchange (NGX).
He noted that immediately following the signing of the bill, insurance stocks surged by approximately 10 percent. “Within 24 hours after the bill was enacted, the share prices of most insurance companies increased sharply,” Bawa said. Out of 17 insurance stocks tracked, only two saw no change, while the remaining 15 recorded gains.
This optimism reflects the market’s confidence in the reforms’ potential to strengthen Nigeria’s financial sector and support the country’s ambitious economic goals.
